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Most states require sellers to disclose
hidden problems (those not visible with the naked eye) that could adversely
affect the value of the property.
These days, sellers are typically required to
deliver their disclosure in writing. This consists of a form filled with
questions about the house, property and even the neighborhood in which the
house is located. Sellers are required to answer these questions honestly. If
you don't know the answer to a question, there is usually a "don't know" box
that you can check off on the form.
While it may seem awkward to disclose the
defects in your house, it doesn't usually turn off buyers. In fact, just the
opposite is true. Buyers like seller disclosures because it tells them about
the problems with the house up front - they know what they're getting. Many
sellers appreciate being able to be honest about the condition of their home.
Because they've warned the buyer that the roof leaks, for example, they don't
have to worry about an angry buyer after the closing.
Each state sets its own disclosure
requirements. In California, for example, the seller disclosure form is six
pages long, and may require a hand-written answer. In Illinois, the form has
just 22 questions on a single page. Some national real estate firms require
sellers to fill out a company seller disclosure form if their state doesn't
require written disclosure. If the buyer directly asks you any question about
the condition of the house, of course you must disclose everything you know.
The consequences of lying to the buyer or on
your seller disclosure form can be severe. If a buyer can prove that you knew,
or should have known, about a problem, he or she may be awarded damages in
court. It is far better to be honest and up front about any problems that might
have to be corrected.
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