Selling a home is a huge step for anyone, and it’s natural to want to achieve the best price possible. However, hiding your property’s flaws to better appeal to a buyer is not just unethical, it’s also illegal under the Consumer Protection Act.
So how do you go about fulfilling your legal obligation to disclose any defects in your property without negatively influencing the sale of your home? The key, according to Roger Lotz, Franchisee for the Rawson Properties Helderberg Group, is to be open and honest with buyers from the start.
“Every property sale is legally required to include a disclosure document that lists any defects the current owner may be aware of,” says Lotz. “That document should include everything from structural defects to plumbing and electrical issues, to noisy neighbours and that stain on the carpet that you hide with your couch.”
Most real estate agents have a standard disclosure questionnaire that they’ll run through with their sellers at some point during the listing process. However, these documents are sometimes held back from buyers until an offer is accepted.
“Waiting until an offer has been accepted before disclosing any defects to the buyer defeats the purpose, in my opinion,” says Lotz. “The entire point of disclosure is to ensure buyers are fully informed before making their offer. This minimises the likelihood of the sale falling through, avoids disputes during the transfer process and prevents potentially expensive litigation down the line.”
To protect both buyers and sellers from nasty surprises, the Rawson Properties Helderberg team routinely includes disclosure documents in the offer to purchase agreement. This ensures buyers are fully aware of any latent or patent defects that could affect their decision to purchase before they sign on the dotted line and acts as indisputable evidence to this effect.
“We also include a list of fittings and fixtures that will be staying or going with the seller to avoid any misunderstandings in that respect,” says Lotz. “We’ve found that this dramatically reduces disagreements and wasted time during the transfer process and provides a record of exactly what was agreed on from the start.”
But doesn’t disclosing defects upfront put buyers off?
“In most cases, no,” says Lotz. “Buyers are usually well aware that all properties have a few quirks and issues. Knowing exactly what these are in advance can actually be quite comforting and can even improve the offers on the table.”
Even in the case of larger defects like structural issues, which are particularly difficult and/or expensive to rectify, Lotz says notifying buyers early is still in sellers’ best interests.
“One of the benefits of going through the disclosure process with our sellers early is that we’re able to discuss any major issues with potential buyers during viewings,” says Lotz. “This helps weed out buyers who aren’t willing or able to handle them, reducing the amount of time our sellers waste considering offers that will fall through as soon as the full condition of the property is revealed.”
And what happens if a seller “forgets” to disclose certain details?
“Buyers would be within their rights to demand the defect is rectified at the seller’s cost, cancel the sale or even sue the seller for damages, depending on the situation,” says Lotz. “The litigation process tends to be long and expensive, though, so we always advise buyers to cover their bases with a professional property inspection, regardless of the seller’s disclosure. This gives the added benefit of picking up any legitimately unknown defects and can provide more insight into the extent and expense of known flaws.”