Disclosure – The Dirty News


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Many real estate investors find themselves in particularly touchy situations. They are either on the receiving end of bad disclosure news, or they are on the disclosing end. When people are looking for the highest return on their real estate investment, they leave out or blur some of the facts that pertain to the property for sale.

Definition

Disclosure is the part of the real estate contract agreement where all of the factors that may affect the value of a property, seen or unseen, are listed and made available to the buyer. Usually, a home inspection prior to the signing of the contract will help to make sure all of the potential problems a property may have are taken care of or are considered before the contract is signed.

Ethics

Disclosure should never be a problem. For some people, ethics are the true issue. Although a property owner wants the greatest sum for their property, they know revealing key details or history about the property may create problems closing on the home or may cause potential buyers not to offer as much for the property.

Disclosing Areas

Areas where this may become a problem are floods, fires, lead paint, asbestos, and termites. If you know about any problems that may affect the value of the home, it is your responsibility and ethic duty to reveal them to the potential buyer. Those items will have to be taken care of in order for the property to have its true value. Otherwise, the buyer would try to sell the property and have to settle for less if these issues were discovered.

Pocketbooks

As an investor, any problems you find after closing will be your responsibility to fix. This is unless you can prove that the previous owner knowingly misinformed and mislead you about the state of the property you were buying. Often, that takes more money in legal fees and retainers than the actual amount to fix the property.

Remember

If you are unsure about disclosing information about a property or do not think the proper information was disclosed to you, get legal counsel.

To keep from signing bad contracts, always get your own inspection report. Do not rely on the other party’s appraisal or inspection reports.

Ethically, it is always the right thing to do the right thing. In this case, tell or in legal terms, disclose.

For more information on real estate investment issues, visit us at Homevestors.com. We have information on real estate investment opportunities as well as real estate franchise opportunities.

 

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