Does Home Disclosure Have to Include Previous Repairs?

On December 18, 2017   /   Home Inspection  
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previous home repair

By: Jeanne Sager

Home repairs are part and parcel of home ownership, but when it comes time to sell, does a home disclosure have to include those repairs?

It can be a conundrum. Buyers want (and deserve to have) a full picture of the house they’re buying and the condition it is in. However, disclosing a previous home repair may actually turn off a potential buyer. A foundation that’s had repairs for leaks several times over in recent years, for example, may signal to the buyer that they could have a major water problem on their hands. Both legal and ethical considerations come into play when you’re debating whether or not to ‘fess up to a previous repair. So let’s dig in!

What do you have to disclose to the seller?

Federal seller disclosure laws require sellers to be open and honest about the existence of lead-based paint in a home, but most laws regarding what a seller must share with a buyer are made at the state level. That means your state may or may not require that you disclose a previous repair, says Kathryn Bishop, a Realtor® with Keller Williams in Studio City, CA. To find out the laws in your state, do a search online for “[your state] seller disclosure laws.”

Does home disclosure include a previous repair?

In Bishop’s home state of California, law dictates that every significant repair made since purchasing a property needs to be disclosed. Your real estate agent will be able to advise you on what regulations must be followed in your state, so it’s best to disclose a previous repair to them at your first meeting about the sale. And note there are some exceptions to the law. You don’t have to share every single fix made in all the years you’ve lived in a house—just the big ones.

“I don’t mean when you’ve changed a faucet washer,” Bishop clarifies. “I mean when you had to repair a plumbing break.”

Nor do you technically have to disclose work done by the previous owner, even if they disclosed it to you. That said, many experts advise that sellers share that information too.

Because they might very well find out on their own, anyway. During the home inspection phase, buyers may request a copy of your Comprehensive Loss Underwriting Exchange (CLUE) report—a free report that details every claim made to your homeowner’s insurance in the past seven years. And even if you paid for a repair without the help of insurance, an eagle-eyed home inspector may note fresh paint on a ceiling repaired after a plumbing leak or start asking why the hot water heater, furnace, and other basement appliances seem to be brand new. Failing to disclose any of these things could put you in serious legal trouble.

The ethical side of seller disclosure

Even when disclosure isn’t required by law, or a project was done by a previous owner, Bishop still discusses disclosure with her clients. After all, you don’t want the seller caught by surprise with an issue that preceded your homeownership.

“If the previous owner disclosed in writing that they had a serious case of mold and it’s been cleaned up, I will advise my client who is now selling to pull out those old papers and disclose,” she says. “We know that what typically happens is the new buyer moves in, and the next-door neighbor asks if the mold has been cleaned up!”

The ways seller disclosure helps you

If following the law and being ethical aren’t reasons enough to disclose a previous repair, there’s are other benefits to doing so, says Michele Lerner, author of “Homebuying: Tough Times, First Time, Any Time.” Among them:

  • Buyers might prefer negotiating with sellers who have proven they are upfront with information about their home, as opposed to those who are just spinning everything to attract buyers.
  • Buyers want to know that sellers have maintained their property appropriately, so providing an example of your diligence in repairing your bathroom and fixing your ceiling can have a positive impact.
  • Your disclosure can protect you from future disputes with the buyers.
  • Buyers may feel relieved that you have already made necessary repairs, since that becomes one project they don’t have to handle in the immediate future.

 

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Should Sellers Hire a Home Inspector, Too? The Pros and Cons of Pre-inspection

On August 29, 2016   /   Home Inspection  
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home inspector

By: Lisa Kaplan Gordon

Every home buyer knows hiring a home inspector to check out a property before closing is a good idea. In fact, a home inspection is often a requirement for a mortgage. The trickier question is this: Should home sellers also hire a home inspector to conduct a pre-inspection? That’s where you have an inspector scrutinize your property for problems before it’s even listed.

Is a pre-inspection worthwhile? Let’s take a look at the pros and cons.

Pro: A pre-inspection means fewer surprises

Regardless of who’s doing the hiring, a certified home inspector evaluates about 1,600 items that make up the property’s foundation, structure, electrical, plumbing, and HVAC systems. The purpose is to uncover hidden and potentially expensive problems that could affect the value of the home.

For buyers, the results of a home inspection contingency in a sales contract can empower them to request repairs, reopen price negotiations, or abandon the deal without forfeiting their earnest money.

For sellers, the benefits of a pre-inspection are less clear-cut. At the very least, it offers some peace of mind: Identifying problems, or lack thereof, can soften the suspense of waiting to hear back from the buyer’s home inspector about possibly pricey repairs that might be deemed necessary.

Con: A pre-inspection costs money

Still, only 10% of home inspectors are hired by sellers, says Claude McGavic, executive director of the National Association of Home Inspectors. And one reason for this may be simply money.

On average, a home inspection will cost about $200 to $500. Because pre-inspections aren’t required, that’s cash you could put toward other things such as home improvements or repairs that you know will help sell your home.

Pro: A pre-inspection gives you time to fix problems

However, pre-inspections give sellers the ability to fix problems ahead of time—and present buyers with a clean bill of health on the property.

“If the seller knows what an inspector thinks is wrong with the house, they can fix it before the buyer’s inspector shows up,” says McGavic. This also presents a strong first impression to buyers, who may see your house in a more positive light and boost their offer.

Con: A pre-inspection doesn’t mean you’re in the clear

Just because you hired a home inspector doesn’t mean the buyers won’t hire their own—and their results won’t necessarily be the same.

“If you had 10 different inspectors out to the home, you would very likely get 10 completely different reports,” says Atlanta real estate agent Bill Golden. “Some of the issues that the seller addressed may not have come up at all. All in all, I think it’s a waste of time and money.”

In other words, even if you spring for a pre-inspection and address the issues that come up, the buyer’s inspector might have overlooked those problems—instead identifying new problems that require more repairs. And because buyers will typically trust their inspector more than yours, they may demand that these other issues get fixed, too.

Con: A pre-inspection could obligate you to disclose these problems

Another downside to pre-inspections is that once home sellers are aware of a problem, they may be required by law to disclose them to buyers. These laws vary by state, so ask your listing agent for more specifics. Generally, bad history—flooding, sewage backups—must be disclosed if you know about it. And because this could perhaps scare off buyers or complicate negotiations, it’s no wonder that some sellers may prefer to stay blissfully ignorant.

“Not that you want to hide anything,” Golden says, “but you may be shining a light on things that may not have ever become issues if you hadn’t hired an inspector. It creates mountains out of molehills and prolongs the process.”

That said, McGavic thinks a seller has a “moral if not legal” obligation “to find out if there’s anything wrong with their house.”

In other words, it might be the right thing to do. So, is a pre-inspection right for you? There is no right or wrong answer, so it pretty much boils down to whether you prefer to nip potential problems in the bud, or wait and see if they develop.

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