There’s an old adage that if you don’t have anything nice to say, you should say nothing at all. The exception is real estate.
What to disclose
As soon as you accept an offer on your home, it’s time for full disclosure. That means telling your buyer anything and everything that could negatively impact the usefulness, value or enjoyment of the property. In most places, that means filling out multiple lengthy forms detailing everything from leaks and home improvements to plans for a new development nearby.
In a few states, you’ll even be required to disclose if the home has been a crime scene or if it’s haunted. Most times, buyers are expected to identify these so-called “stigmatized properties” on their own, since a “stigma” isn’t a material fact. But follow your agent or attorney’s advice.
Other than things that may go bump in the night, what should you disclose? Everything. Did you build an addition? Disclose it. Was it permitted or not? Disclose it. Does your next-door neighbor cheat at Scrabble? OK, maybe that you don’t need to disclose. But almost everything else is disclosure material.
Consequences of failing to disclose
What’s the harm in just omitting the fact that you had a flooding issue in the basement three years ago if it hasn’t happened since? Plenty. Obviously a full and honest disclosure gives buyers the information they need, and it’s the right thing to do. But just as importantly, it protects you from future legal action.
If it’s a particularly rainy winter and the basement floods a few months from now, that Scrabble-cheating neighbor will probably mention it’s happened before. Or the contractor hired to pump and dry the basement will have a record of the previous job. Either way, the new owners will know you hid an important fact and may sue for failure to disclose. The time limit varies, but you can be on the hook for things you failed to disclose for up to 10 years.
The best solution to disclosing past problems is to also outline exactly what steps you took to remedy them. Did you install a new drainage system to alleviate flooding? Fully dry and clean the basement to prevent mold after the flood? Tell them that and better yet, show them the receipts.
Inspections vs. disclosures
Don’t confuse an inspection, either by you or the buyer, with disclosure. Satisfying an inspection contingency doesn’t let you off the hook. Inspections are designed to let the buyer kick the tires, so to speak. Disclosure means you tell them anything you already know about.
Those words, “you already know about,” are important. You aren’t required to search out problems. You just need disclose those you know about. Is there asbestos in the acoustic ceilings? Lead-based paint on the window sills? If you don’t know, that’s all you have to say. You aren’t required to send samples out for testing so you can provide an answer. But once you know, you must share that information with the buyer.
If you’re working without an agent, be sure to understand the state and local disclosure laws where you are and get the appropriate forms. It’s probably worth hiring a local real estate attorney just to walk you through that part of the sale if you’re going it alone.
Pointing out the flaws probably seems like a strange and frightening exercise when you’re trying to sell something. But, in real estate — and life in general — honesty is the best policy.
Article originally published on zillow.com