When are disclosures a red flag to buyers?

Asked by Theo Simons, San Diego, CA Fri Dec 14, 2007

I was interested in your answer to another question, where you advised someone to disclose a noisy neighbor when selling her house because of California disclosure law. I am in a similar situation and also have a friend who is being sued for failure to disclose a barking dog. Therefore, I would like to disclose all possible issues with our house that are not obviously visible but may be a (minor) problem, such as barking dogs, noisy neighbors, painted over cracks in the ceiling, plumbing repairs, minor roof leakage, etc. However, I am also worried that this may scare off buyers. In your opinion, is a long list of minor, but still reasonable, problems in the disclosure a red flag to home buyers and/or their realtor in California, or do they pretty much expect that because of the strict disclosure laws and even appreciate the honesty?

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Jim Walker, Agent, Carmichael, CA
Fri Dec 14, 2007
My instructors taught me the following standards for RETDS (disclosure form)

1. Disclose all that you see, smell, hear, sense, or know.
2. Disclose all past repairs that have been completed that you are aware of. Disclose all known or suspected unrepaired items, even if seemingly minor or insignificant.
3. Do not estimate costs of future repairs, leave that to professionals or to the buyers.
4. Do not try to determine the cause of the defect, unless you are 100% sure of what caused it. ( such as: I know that a baseball chipped the paint on this outside wall, but I don't know what caused this other chip.)
5. Disclose early. Disclose significant issues in the MLS agent remarks. Have an RETDS filled out and available for review by potential buyers before they offer.
6. It is better to lose a troublesome, fussy buyer early than to go partway through an escrow only to have them cancel halfway through. Or worse to let, them close escrow then come back to sue later.

Most real estate buyers appreciate the honesty. I also applied the full disclosure tactic when I sold my old family cars and old SUV ( situations where there was no legal requiement for me to do so ) - and got top dollar for them.
5 votes
Sylvia Barry,…, Agent, Marin, CA
Fri Dec 14, 2007
Hi Theo:

I think most of the Realtor will give their buyers prudent advise on what are customary, minor, regular wear and tear problems for a resale home and what is more of a red flag.

In addition, the Realtor will advise the buyers to do their independent inspector, whether home (contractor) or termite inspection. The seasoned inspector will also point out whether things are acceptable or not.

The good thing about disclosing all things you know is that by doing so, you have nothing to hide and the buyers feel comfortable that they know what they are buying; and even if they don't like it, they are willing to accept it with the purchase. .

When things show up and you did not disclose the fact even know you are very aware of the problem, that's whey there will be problems for sellers.

The old saying is 'If you have to ask whether you should disclose something (of the nature to materially affect the value of a property), then you need to disclose that.

I did advise one of my clients not to disclose one thing - My client just did not like the neighbor due to previous problems with their childcare arrangement - I told my client this is personal relationship and had nothing to do with the house and that's one item which does not need to be disclose.

3 votes
Don Tepper, Agent, Burke, VA
Sun Dec 16, 2007
Jim's answer is particularly good. And Realtors are instructed to "disclose, disclose, disclose."

Now, I can't speak to California law or regulations, but I would throw two cautions in.

The first is, as a buyer, to be careful if there's a huge list of seemingly minor disclosures. Read the list carefully; it might just be a strategy to slip a more significant problem in among a whole slew of very minor ones. As a seller, a buyer might be concerned about that issue. Overall, though, it's better to err on the side of over-disclosure than under-disclosure.

Second, and again I'm not a lawyer and I don't know California regulations, but I'd confine diclosure to the property I'm selling. I'm not selling the house down the street. And I'd limit disclosures to items that physically affect the property. For instance: a neighbor likes to work on his car, so sometimes he'll rev the engine for 15-30 minutes. Should that be disclosed? Or a neighbor likes to have the best yard in the neighborhood, so he's out there twice a week mowing his lawn, and blowing leaves every day. That's a major annoyance to some, but not a problem to others. The house is 2 blocks from a major highway. That's a major selling point to some, but the noise could be a turn-off for others. I know there have been court cases about people buying houses near existing airports, then complaining about the noise.

In short, disclose what you know about what you're selling. And disclose, if you wish, known facts about things that you know will affect a buyer's peace and enjoyment in the property. But don't try to read a buyer's mind and "disclose" things that not only are irrelevant to your property, but may well be irrelevant to the buyer.

Hope that helps.
2 votes
Ginger R., Home Seller, Massachusetts
Sun Dec 16, 2007
I would like to pipe up on the barking dog issue. THIS CAN BE FIXED. Just about every town has a noise ordinance and it can be enforced. Go on the town web site, find the ordinance and then call town hall and ask who is responsible for enforcement. In our town, it is Animal Control w/in the police dept..

We want to be good neighbors. I would first go see the neighbor and explain the problem. They may rebuff you but either way, you have done the neighborly thing. Then, if they continue, start calling animal control. They will first get a warning, but then a ticket. Fines get steeper with each ticket.
They will have to go to court but unfortunately, so will you. Take a week off & start calling animal control a couple times a day. Your home is worth hundreds of thousands of dollars and you need to protect your investment.

We had a neighbor with an illegal kennel. We didn't want to be bad neighbors so we let it go, even tho it made our life a misery. When it came time to sell, we had no choice but to a address this. It took a couple of months but it was fixed.

OK, off my soapbox. :)
1 vote
Ian A. Wolf, Agent, Morristown, NJ
Fri Dec 14, 2007
I advise all my clients to disclose as much as possible. Buyers shouldn't be scared off by little items. If anything they'll feel good that they are dealing with someone who is not trying to hide anything. People will fall in love with a home even if they know there were repairs. Homes require maintenance, and it is expected that some will have been done.
1 vote
Christina On…, , Tracy, CA
Fri Dec 14, 2007
Hi Theo,
I am so glad you asked this question. My advice is disclose it all. You are so much better off telling the facts & letting your potential buyer do their due diligence & investigate further than not saying anything. Another way to put it, is if you have to ask should I disclose something than the answer will most likely be yes. Put yourself in your buyers shoes. You sound like a very responsible seller & that is the best way to go always. I understand your fears of scaring a potential buyer, but better to tell them then to have them be upset later & possibly sue you for something you did truly know about. Honesty is always appreciated. Take care.
1 vote
Judi Monday,…, Agent, Green Valley, AZ
Tue Sep 21, 2010
As the old adage goes better safe than sorry. I always advise my Sellers to put themselves in the Buyers shoes--if YOU were buying the house is this something YOU would want to know? This past week I had a Buyer come into my open house--fell in love with the house and asked me if there were any barking dogs. I could honestly tell him that during the times I have spent in the home I didn't hear any dogs--checked with the Seller who said the same. I also advised them to talk to the neighbors--because what is an irritant to one may not be for someone else. Bottom line if in doubt always err on the side of disclosing.

0 votes
Lisa Thorik…, , San Diego, CA
Tue Sep 21, 2010
I agree with the other comment about disclosing, disclosing, disclosing. Every house is going to have issues. New homes issues haven't even been discovered yet and they're new, so no home buyer is going to expect your home to be perfect. If you can fix something easily do that and document what the problem was and how it was repaired and keep the receipts. If a crack in the ceiling was painted over was the problem that caused the crack? If there are major issues, cracked foundation, structural or engineering problem, major plumbing or electrical, additions with lack of permits, etc, etc deal with them on a case by case situation with your agent to remedy the problem or get repair estimates and price the house accordingly. Anything that would interfere with FHA financing is going to limit the buyer pool considerably.
Anything you would want to know, disclose. Honesty is the best policy, always! I haven't come across a situation yet when honesty wasn't appreciated.
Except maybe for surprise birthday parties :)
Lisa Thorik
Web Reference:  http://www.lchometeamsd.com
0 votes
Robert, , San Diego, CA
Thu Sep 16, 2010
Feel free to call me and I can help you with this disclosure issue.
0 votes
Marty Van Di…, Agent, Palmer, AK
Sun Dec 16, 2007
The real red flags on disclosures are the ones made AFTER the contract. If you dislcose up front your are cool.
Web Reference:  http://www.valleymarket.com
0 votes
Lance Blackm…, Agent, San Diego, CA
Fri Dec 14, 2007
Hi Lia

The seller's transfer disclosure is an attempt to keep everything on the up and up. We all want to be treated fair and just. Unless there is major issues such as plumbing or foundation issues most buyer's can accept minor things and what are mainly visual maintence issues. It is best to disclosue anything
you feel might be an issue. If there are such things as a roof leak or plumbing issues it is best to repair them before putting the house on the market as they will need to be addressed before close of escrow, repaired or they may become a barganing tool for the buyer looking for a lower purchase price.
Lia, when in doubt, disclose!
0 votes
Garrett Smith, , Modesto, CA
Fri Dec 14, 2007
They are red flags when it looks like something has been hidden, but each case has to be weighed individually as lots of buyers get worried about different reasons.
0 votes
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