Seller disclosures can provide you with the information you need to make sound financial decisions. In this post, we’ll dive into their role in the investment process, as well as tackle which factors to look out for in your seller’s disclosure form.
What are seller disclosures?
Seller disclosures play a vital role in real estate transactions, providing a closer look at a property’s condition. These disclosures are legal documents that clearly outline the pertinent details about a property’s state, allowing for transparency between the property owner and potential buyer. The inclusion of “material facts” in these disclosures grants buyers full knowledge of the factors that can affect the property’s value, empowering them to make well-informed decisions.
Seller disclosures are often presented as forms with a series of pre-made statements. Sellers must respond to these statements by either marking them as “yes” or “no”. It’s worth noting that even properties being sold “as-is” (these often pertain to those that needed extensive repairs or improvements) are not exempt from a seller’s disclosure.
If you aren’t sure how to read your seller’s disclosure form, consult a professional property management firm.
Why should buyers consider these disclosures?
There are two main reasons why it’s non-negotiable to look into seller’s disclosures:
Facilitates informed decision-making
Seller disclosures can provide you with a solid foundation for your prospective properties, sparing you from future issues and financial strains. If you choose a property based solely on a “good” price, you could find yourself facing unexpected costs if issues, such as mold problems, surface in the future. A seller’s disclosure arms you with the must-know details, allowing you to make well-informed decisions, and make sure you’re fully aware of what you’re getting into.
By doing your due diligence, you can prevent unwelcome surprises and gain a sense of confidence in your choice to buy. In that way, you can make decisions that align with your long-term investment goals.
Ensures fair pricing
Note that in some cases, sellers might choose to withhold certain details to preserve their property’s perceived value. Failing to go over the disclosure form could inadvertently lead to overpaying for a property.
If you don’t agree with the list price after discovering certain property concerns, you may be able to negotiate a more reasonable rate. A property management company can conduct an appraisal, which you can use to “compare notes” with the buyer and position yourself better for negotiations.
Protects your property’s value
Moreover, a seller’s disclosure serves as a source of information for facts that may influence a property’s valuation. These documents contain a full report of the property’s history, such as repairs and renovations that have been made, issues that have been addressed, and more. A comprehensive view of its state can allow you to realistically set your expectations regarding the property’s value, especially if you plan to flip or sell.
What should sellers disclose?
Here are a few examples of the details sellers must disclose in their form:
Death in the home
State laws tend to vary when it comes to which causes of death need to be disclosed. However, sellers do need to disclose deaths directly related to the property, as well as those resulting from crimes. For example, if someone died due to the property’s slippery patio, this fact would need to be disclosed.
To make sure your seller has disclosed all pertinent details, think about collaborating with a property management firm in Florida. This is particularly critical if you have superstitious concerns when it comes to owning a home where death might have transpired, regardless of the reason.
Sellers must disclose all repairs they’ve done to the property, as this gives the buyer a clear picture of its condition, as well as future problems they may face. Everything from roof leaks, cracks in the foundation, sewage system issues, to HVAC concerns should be found in the seller’s disclosure form.
Water damage is one of the main concerns among homeowners due to the cost associated to address it. For this reason, sellers are required by law to disclose whether the property has past or present issues concerning water. For example, if the basement was once flooded due to rain, this must be disclosed, as it implies that the property may have vulnerabilities the buyer needs to be aware of.
If a property is in an area governed by a homeowner’s association (HOA), this must be disclosed by the seller. Disclosure of HOA involvement is crucial, as it signifies that the buyer must abide by specific rules, pay HOA fees, etc. Furthermore, some HOAs impose rules on the property’s use. Buyers planning to rent out their property may not be able to do so if they weren’t made aware of this detail. By finding out if there’s an HOA, you’ll be able to invest in an area that aligns with your goals.
While they’re beyond the property owner’s control, nuisances in the neighborhood must still be disclosed to buyers. For example, if a property is in close proximity to an airport, the buyer must be informed about this because the constant noise may disrupt their daily life. Communicating these details will allow future owners to set realistic expectations for their quality of life.
This is perhaps one of the most important disclosures. This is because properties with the presence of radon gas, lead (e.g. in paint), or asbestos can pose serious threats to the occupants’ health. These facts must be disclosed even if the seller has already taken the necessary measures to remedy them.
Items not included in the sale
It’s not uncommon for sellers to “stage” their properties to entice buyers, but this can lead to false expectations. For example, some of them may think that the fixtures are included, only to find out that the home is empty on move-in day. To prevent misunderstandings, sellers must provide a full list of items included in the property sale.
How property management companies can help
If you have a property you want to invest in, whether to turn into a rental or residence, make sure to partner with a property management company like Luxury Property Care. With our expertise, we can carry out a comprehensive property inspection, taking into account all pertinent factors that may influence its value. In case the seller’s disclosures vary from our findings, we’ll aid you in securing a fairer purchase price through skillful negotiation.
For more information on how we can help, call (561) 944 – 2992 or complete our contact form today.