Disclosure From Seller
Real estate is complicated in many ways. If your not thinking about; where to buy a house, how to sell yours, whether you need to hire a lawyer etc, then you're probably just stressed out about something else that is equally important.
In some cases, in fact the majority of real estate issues your real estate agent or Realtor will be more than capable and happy to assist you with whatever dilemmas you may have. Also if you feel that you need the advice of an attorney, especially for contracts, they will be able to help you find a suitable one. The majority of homebuyers are very capable of managing all of the routine real estate purchase contracts, yet some people decide, for extra piece of mind, to hire a lawyer to handle all of the contractual and fine detail areas of the deal.
Obligation To Tell All
One thing that is often overlooked however by a buyer is the obligations of the seller to disclose certain information about other items. These items generally fall into two categories, identified below:
1) Disclosure of the terms of other offers from prospective buyers
2) Disclosure of information regarding; faults, land violations and problems with the property you are interested in purchasing.
The first category of disclosure, highlighted above, is an interesting one and is more complicated than it may first appear, posing more of a moral dilemma than a legal requirement.
The question really that needs to be answered regarding disclosure of other offers received by the seller is should you disclose the terms of a prospective buyers offer to another buyer; as there is no legal requirement for them to do so.
In real estate law, or dogma, the seller is not liable to disclose any of the offers that they receive from prospective buyers. There is a good reason why there is no legal requirement for the seller to disclose the offers they receive and it is this: the real estate market works under the ideal of a free market economy. If sellers were legally required to disclose all the offers that they received, then buyers would only pay slightly above the highest offer received by the sellers. This would be unfair on the seller, as they have a right to command the highest amount possible for their house. A large part of the real estate selling process is fielding multiple bids, to generate a large return on the property. Such a scenario where the details of all bids were disclosed would rule out any real bidding war and prejudice the sellers. As a consequence fewer people would sell their homes, for fear of receiving low offers.
Understanding that a property seller is not required to disclose all the offers that they receive still does not answer completely the question as to whether they should disclose all the information about the bids that they receive.
At first glance most people would argue that a seller should not disclose all of the bid information, as they would be reducing the chance of creating a bidding war; which would increase the value of their property. Whilst this is a fair point you should also consider the market conditions at the time of selling as a key indication of whether you should disclose any bid information.
In a slack market, where there are more buyers than good quality houses, the chances of a bidding war for a property are high. Assuming that your house is in a good condition there will be no shortage of offers and you can refuse to disclose bid information safe in the knowledge that people are 'desperate' to buy a house a will be prepared to possibly pay more than it is worth. However, now consider the alternative.
In a housing market that is stocked with good quality housing the chances of a bidding war are reduced. If a prospective buyer who wishes to know what others are offering on the house approaches you and you choose not to offer the information, you run the risk of the bidder pulling out, because they may not want to play 'mind games' and pay over the odds. Your decisions to withhold information willl herefore have backfired, and you maybe forced to accept a lower offer, or withdraw your property from the housing market.
The second category that was mentioned earlier asked the question as to whether the seller was required to disclose information about the house, or property, such as faults and violations etc. This is a more straightforward question to answer.
Everyone can look through a property at an open house, or have a personal tour. You might be able to pick up on a few things, but you want be able to spot half as many of the problems that the seller knows about.
Sellers have years of living experience in the home you are looking to buy and the knowledge that they have about the property is important information that maybe essential to making the right decision for you.
Property Disclosure
Firstly it is important to understand that sellers (individuals and banks; selling foreclosed properties) are legally required in most states to reveal all facts materially affecting the value or attractiveness of the property, which are known to them. However, just in case of any problems, you should always have the need for property disclosure written into your offer to the seller.
In the majority of cases, the disclosure of all of the relevant information regarding the property is given to the buyer in a form called a 'disclosure document'. This document highlights in detail the possessions in and attached to the house and the condition of the property.
Although normally all relevant information must handed over to the buyer the most common information that is noted in the disclosure form includes the following:
1) Description of equipment in the kitchen: e.g. microwave, oven, dishwasher, garbage disposal and trash compactor etc.
2) List of safety feature in the property: e.g. fire and burglar alarms, smoke detectors, sprinklers, window screens, security gate and intercom.
3) Items physically attached to the outside of the house: e.g. satellite dish, garage door, TV antenna, automatic garage door opener and gutters.
4) Amenities and other facilities in the house: e.g. pool or spa, patio or deck, barbeque and fireplaces.
5) Style of heating and its condition: e.g. electrical wiring, gas supplies, external power source such as solar panels.
6) Type and condition of Water supply: e.g. type of water heater, water supply, sewer system or septic tank
Also required to be disclosed by the seller and important for the buyer to know are any major defects or faults that exist in the major systems of the home.
As wells as all of the above items, any of the following are also required to be disclosed as they may have an impact on the buyers decision to purchase the property:
Environmental hazards Walls or fences shared with adjoining landowners Room additions or repairs Zoning violations Citations against the property Lawsuits against the seller affecting the property Any deaths in the past three years
Written guarantees that additions or repairs were made with the essential permits or in compliance with building codes should also be given by the seller to the buyer, as well as information on any damage from:
Settling sliding or soil problems Flooding or drainage problems Earthquakes, floods or landslides.
Condominium sale disclosure forms must also contain information for the buyer on any agreements, codes and restrictions to the property.
