Should You Disclose Real Estate Property Problems?

Sep 14, 2021
3 min

More Property Disclosure Less Problems

Homebuyers stress over finding the absolute perfect home. When they purchase a property, they want to know everything there is to know about it.

But, when the seller withholds a real estate disclosure, the buyer could find these imperfections after the purchase.

Without a property disclosure form, the seller could be held responsible for fixing these issues that creep up after the transaction - especially when they had already known about them. A seller’s disclosure agreement helps make all issues with a house apparent to the seller.

By signing a sales disclosure form all parties are legally aware of the property problems before closing the purchase.

Does the Buyer Have a Right to Know?

Yes - buyers always have the right to know about issues with a piece of real estate. This is because the homebuyer may not want to purchase the home if they had known about the property’s defects.

With this in mind, it would be unethical to knowingly withhold information from them.

A house disclosure informs the buyer of every defect. Some agents might think this is a bad thing, as it will deter buyers from making a purchase.

To some extent, this is true.

But, buyers will be more eager to work with an agent, if they’re upfront and transparent with the house issues.

The Real Estate Disclosure Form

The best way for the buyer and seller to communicate the problems with the property is through a real estate disclosure form.

Also known as the seller’s disclosure form, this legal statement reports the condition, well-being, and material defects of the home.

The seller’s property disclosure statement is usually found in the transaction document. This will have a complete description of the defects of the property and ensure the buyer is aware of these problems before completing the transaction.

When the buyer reads the disclosure statement, they will be informed about the property issues.

When the seller or agent intentionally withhold information on the property problems, there will be a chance of legal repercussions.

Legal Backlash from Withholding Property Problems

There will be legal backlash for the real estate agent - and especially the seller - if problems are knowingly withheld from the buyer.

In some situations, buyers are even suing sellers for nondisclosure of latent defects.

Latent defects are problems that are not obvious during the house inspection. One example of a latent defect in the house having a coat of led paint.

This isn’t something that would be obvious during the initial inspection. Therefore, the buyer will have to be told about this information.

However, the seller and agents are not responsible for sharing patent defects. These are the issues that are apparent upon a normal inspection of the property.

This could be apparent house blemishes, such as damaged material property.

Why Disclosures Can Make You a Great Real Estate Agent

So, who’s responsible for fixing the issues with the property? Moments like these are why real estate agents are important.

Disclosures can be used as negotiation power during the transaction. That’s why most sellers are afraid to share them.

A real estate agent will leave a major impact on their client if they’re able to negotiate in their favor.

If you’re representing the buyer in a transaction, and you’re able to convince the buyer needs to fix the issues with the property, you’ll be doing the buyer a major favor.

Putting the needs of the clients first is one of the characteristics of a successful real estate agent.

Every week, we release in-depth videos to help viewers become successful real estate agents on our CA Realty Training YouTube Channel. You will also find videos on our free introduction classes in our courses.

Sep 14, 2021
3 min