Why Transparency Is Always the Best Policy When Selling a Home

Real estate professionals usually recommend that homeowners make some changes before listing their home on the market. At a minimum, it’s wise to update fixtures, repaint the interior, and repair or replace broken appliances. Homeowners don’t have to repair every defect, but failing to disclose major defects that are not visible upon inspection, is illegal.

Homeowners must sign either a disclosure or a disclaimer when selling their home. The disclosure informs buyers of known specific items in the property and any known defects; the disclaimer states that the seller is unaware of any defects and is selling the home “as-is.” Buyers may be wary about a home that’s not covered by a disclosure form.

Avoiding Common Real Estate Problems

Any buyer interested in purchasing a specific home will hire their own inspector to assess the property. Sellers that aren’t aware of their home’s defects may be unpleasantly surprised by the results of the buyer’s inspection.

An inspector may find defects like mold growth or termite damage – problems that, if left untreated, can make a home uninhabitable. Even if buyers are willing to repair those defects, they’re not going to pay the full asking price for the home.

Sellers can hire an inspector before listing their home, so they have a clear understanding of any existing defects, their severity, and whether those defects could significantly lower the value of their home.

Selling a Home as a ‘Fixer-Upper’

People who are current homeowners and are looking to move to a new home have probably already been working on pre-sale improvements to their own home. If they’ve just repainted, replaced appliances, and remodeled their bathroom, odds are they don’t want to buy a home that needs extensive rehabbing. Most buyers of fixer-uppers are “house flippers” – people who rehab homes quickly and sell them for a profit.

Sellers that plan to market their home as a fixer-upper should be prepared to accept offers lower than the asking price, especially if the cost of repairing defects is unpredictable. For example, buyers could accurately estimate the cost of replacing a home’s appliances, but it’s harder to predict the cost of major repairs, such as replacing old electrical wiring.

Protecting One’s Interests

It’s understandable that some sellers may think signing a disclaimer and selling their home as-is is the easiest way to avoid liability for defects. That’s not necessarily true. If, at some point after the sale, the buyer discovers a major defect, the buyer may try to sue the seller on the grounds that the seller did have knowledge of the defect. A court may decide the defect was significant enough that the buyer should have known about it, or did know about it.

Transparency is always the best approach when selling a home. Sellers who hire their own inspector and get a detailed assessment of their property can then decide what repairs are worth the investment. Unrepaired defects can be formally disclosed, and the buyer and seller can negotiate about repair costs. In some transactions, the seller might offer to pay a pre-determined amount of money to a contractor to perform repairs or offer to pay all closing costs.

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