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Seller disclosure: what it is and how it works

what is a seller disclosure
Seller disclosures make buyers aware of what they're getting in a home.

Home sellers are often nervous about how their home’s flaws will affect the sale, but here’s the thing: no home is perfect. In fact, homes on the market typically come with seller disclosure forms explaining all of their issues. A seller disclosure ensures the buyer knows what they’re getting in a home, and they protect sellers, too.

Here are the answers to your questions about seller disclosures.

  1. 1. What is a seller disclosure?

    A seller disclosure, or home disclosure, is a form sellers fill out before putting their home on the market. It includes any known issues with the home, as well as any upgrades or repair work. This helps buyers evaluate the home fairly, and saves everyone from surprises during the home inspection. The exact forms used and what must be included varies from state to state, but federal law requires disclosing lead-based paint and asbestos.

  2. 2. When do I complete my seller disclosure?

    A home disclosure is usually done early in the process of selling a home. Laws and common practices vary from state to state, but in some places, the seller disclosure is even attached to the real estate listing. In other places, it’s handed to any prospective buyer who asks, or shortly after the house goes under contract, but before the buyer sends their inspector over.

  3. 3. What goes in a seller disclosure?

    A seller’s disclosure isn’t about a broken screen. It’s about big stuff that relates to the structural integrity of the home or quality of life. Exactly what must go on it depends on where you live. California famously has very strict home disclosure rules, but Alabama doesn’t require disclosing much at all. In general, in most places you’ll want to include the following:

    • Any permanent defects affecting the home’s structure or systems, like electrical, plumbing, or HVAC
    • Previous or current issues with the home’s structure or systems
    • Major repair work completed on the house
    • Any construction done on the house and whether or not permits were pulled
    • Health hazards such as lead paint or asbestos
    • Environmental issues like frequently noisy neighbors
    • Any bankruptcies associated with the property
    • Flood danger to the property
    • Well or water rights, depending on if the home is in an arid water or doesn’t have a municipal supply
  4. 4. How do I know which seller disclosure rules to follow.

    Because regulations about seller disclosures differ by state, you’ll need to do a little research. Your real estate agent can help, as well as your local housing authority. A state or local real estate association may have forms a homeowner can complete, mostly with yes or no questions about the home and work completed on the home.

  5. 5. How honest should I be on my home disclosure?

    Be very honest. While it may seem scary or counter-intuitive, a very detailed seller disclosure form for a property can become a selling point—and it can save you time and risk.

    Definitely include anything a home inspector could find. If the inspector uncovers issues that aren’t in your seller disclosure, it could risk your whole sale—not only do surprises work against you in negotiations, but they can make a buyer lose trust in you. They may start to wonder what else you’ve been hiding. And once the sale goes through, a buyer could try to hold you legally responsible for any issues they find that weren’t on the seller disclosure.

    Your seller disclosure may deal with your home’s flaws, but now it’s time to play up its selling points. Here’s how to stage a home before you sell.