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When in Doubt, Leave Nothing Out

Disclose all issues when selling your home

By Broderick Perkins

November 23, 2008

Mortgage Crisis? Act Now to Avoid Foreclosure • Avoiding Foreclosure Takes More Than Hope --- • Home Prices Fall, But News Is Less Bad For Homeowners • Marketing Analysis Suggests Housing Bottom • Mortgage Rates Dip As Inflation Fears Ease • Have Mortgage Rates Hit Bottom? • Ex-Countrywide CEO Faces Fraud Charges • Pending Home Sales Surge in April • Foreclosure Starts Hit 1 Million For the Year • Mortgage Delinquencies At Record High • Existing Home Sales Rise in April • U.S. Home Values Now 32 Percent Below Their Peak • Bankruptcy Not Helping People Keep Their Homes • Home Values Plunge 14 Percent In First Quarter • One In Five Homeowners Underwater • Pending Home Sales Turn Around In March • Senate Defeats Mortgage 'Cram Down' Bill • Mortgage Rates Keep Falling • Home Sales Fall in March • Home Prices Show Surprising Gain in February • Foreclosures Up 9% in First Quarter • Southern California Home Sales Up Again in March • Mortgage Applications Rise Sharply • Obama Administration Targets Mortgage Fraud • Homeowners Still Behind On Modified Mortgages • Consumers Fall Further Behind on Loan Payments • Pending Home Sales Show Some Life • Home Prices Down To 2003 Levels in January • Fed Action Spurs Refinance Frenzy • Existing Home Sales Jump Five Percent in One Month • California Authorities Arrest "Loan Modification" Scam Artists • Southern California Home Sales Up Again • Loan Modifications Can Reduce Foreclosures, Study Says • Scammers Use Forged Bank Letterhead to Con California Consumers • Foreclosure Activity Up Six Percent in February • States Battle Feds To Enforce Lending Laws • Mortgage Delinquencies Continue to Climb • Obama Begins Mortgage Rescue Program • One Of Five U.S. Mortgages Under Water • Florida Court Blocks Loan Modification Company's Fees --- • More ...

If during a home sale you can't determine if a known issue requires a disclosure, don't cut corners for a fast sale.

Instead, follow this rule of thumb "If you can't figure it out, don't leave it out."

Sure it can be frustrating, exhausting and time-consuming to sell a home in some markets today, but don't try to speed up the sale by glossing over proper disclosures.

Not only is it illegal for you and your agent not to disclose certain material facts that can affect the value, desirability or salability of a home, most savvy buyers will quickly walk away if he or she suspects deceit.

If you lie by omission and get caught, not only can you face both local and federal charges, you'll still have a home to sell in a less-than-hospitable market. The extra time spent selling your home or on your day in court could further stigmatize the property.

Of course, if you honestly don't know about an issue, or there's little if any chance you should have known, you obviously can't report it.

That's what makes it not a bad idea to get a home inspection so you do know what to disclose. An inspection reveals your attempt at discovery, it will help you determine which items need repair or replacement (not that you are required to make certain repairs during a home sale), you can use the inspection to price your home and the inspection is a good negotiating tool.

Here are some more specific disclosure tips:

• Don't generalize. Each state has its own set of disclosure laws. Your local or state real estate association and your real estate agent have the proper forms. Both you and the buyer must sign and date the disclosure report to acknowledge delivery and receipt.

• Common property-specific items likely to arise include issues with construction or home systems. That includes problems with the foundation, roof, windows, doors, electricity, plumbing and the like. For a home improvement completed without a permit (which could itself stop the deal cold), get a permit and make sure the work is to code -- even if that means ripping out the old work and getting it done right.

Rather than reporting "repairs" -- which could imply a defect was permanently corrected -- explain what work you've had done. You called the electrician for faulty wiring at a junction box or you had a plumber fix a leak under the sink, for example.

Likewise, you can tell the prospective buyer that you replaced the roof, installed a new water heater, added wind shear protection or installed a sump pump in the basement, etc.

• Common items that are less property-specific include, a noisy neighbor, trees uprooting the sidewalk, crime and proximity to busy streets, golf courses, equestrian trails and short term rental ordinances, among a host of others. If you'd want to know, the buyer probably would too.

• Disaster prone states often require sellers to disclose information about the home's proximity to fire, flood, earthquake and other hazard zones. It's not a bad idea to know if your regional climate is the victim of climate change, given today's earth-conscious buyer. Do disclose zoning, easement or local ordinance issues and the proximity to other natural hazards like mudslides, landslides, even noise, air and ground pollution, among others.

• Disclose insurance claims. Don't let the buyer discover insurance claims against the property when he or she applies for coverage. Give them a C.L.U.E (for Claims Loss Underwriting Exchange) report. Only home owners can obtain it, but buyers can make the deal contingent upon seeing a copy. Available to property owners once a year for free from ChoicePoint, the report is a record of claims and claim inquiries on a given property. Insurers use the information to decide to issue a new policy, renew or raise rates.

• A federally mandated lead-based paint disclosure is required for all transactions if the home was built before 1978, but most agents advise making the disclosure for any property. The seller doesn't have to inspect for lead, but must give the buyer materials that discloses the hazards of lead-based paints and related consumer information.

• Among some miscellaneous disclosures that are required or should be considered includes the locations of registered sex offenders, housing market conditions, and, if they happened in the home, certain deaths and certain causes.

If the deceased won't walk into the light and you see dead people, you've got to report that too. Even if you haven't had any bumps in the night, but word's gotten around the house is haunted, you've got to let the buyer know some ectoplasmic spirit already possesses the home.

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Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shop Deadline Newsroom. Contact him at news@deadlinenews.com.

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