What Should Buyers Look for in the Sellers Disclosure?

Texas state law requires that a Seller’s Disclosure Notice be delivered to the prospective home buyer as part of the contractual process. The idea of disclosure is simply to tell prospective buyers what the seller knows about a property. Most, but not all, single family home sales (several exceptions apply), require the seller and a real estate broker to disclose to a prospective buyer any known material defect in the property. What should buyers look for in the sellers disclosure?

Disclosures are the Seller’s Opinion of the Property’s Condition

It’s important to note that the disclosure is not a warranty and should not be relied upon as the sole source of information about the condition of the property. It’s only the seller’s opinion of the condition based upon the seller’s actual knowledge. The seller has no responsibility to crawl the attic, open walls or bring in a contractor to check out a system or component. So, as a practical matter, here are several ideas to help you use the Seller’s Disclosure Notice more efficiently and spot red flags which may need further evaluation.

What Should Buyers Look for in the Sellers Disclosure Notice?

We consider the Seller’s Disclosure Notice the starting point in the buyer’s due diligence process. We’ll point out some of the red flags we are looking for in the notice.

Is the Property Leased?

If the answer is “yes”, you may not be able to move in until the lease expires and tenant moves out.

What Features and Equipment Exist and What is Their Condition?

Note: The terms of the contract will stipulate which of these items will be conveyed not the notice. For instance, if you want the refrigerator, the outdoor grill or the freezer in the garage, you must ask for it in the contract.

Who are the Utility Providers?

Verify that the providers stated are actually those that service the property and find out whether you have other choices. For some buyers who supplies the water and its quality is important and for others getting a specific type of internet service is critical. Others do not want a home that’s located in a MUD.

Did the Seller Do Any Remodeling or Correct any Damage from Flooding, Fire, or Pest

If so, does the seller have building permits, final approvals and architectural plans? Who did the work? Does the seller have invoices and warranties? Are the companies still in business?

Does the Seller Have any Written Inspection Reports?

Old inspection reports can be enlightening. Ask for them.

Has the Seller Made any Insurance Claims on the Property?

Prior claims may affect your ability to obtain insurance on the house.

Easements, Encroachments and Boundary lines.

Any disputes about who owns what, or its legality? We recommend that the buyer get their own survey from a licensed surveyor and not accept the sellers even.

Drainage, Flooding and Water Intrusion.

Are you in or near a flood plain? Water damage is arguably the most common threat to property. Have a specialist evaluate the potential water intrusion. 

Foundation Settlement and Erosion.

The Austin area has expansive soil…it moves. Foundation repair can be very costly. To learn about the condition and performance expectations of the foundation, hire a foundation expert.

What are the Disclosed Defects and Malfunctions?

Is the seller going to repair these items or will their remediation be on you? Should these issues be negotiation points?

Are there References to Wood Destroying Organisms?

Pests can be a nuisance or worse. Know what kind may be affecting the property. 

Did the Seller Receive Any Notices?

Here we are referring to notices – of any kind – from governmental agencies or private companies that affect the property. Concerns involve potential foreclosure, mandatory repairs, required replacement, abatement or condemnation to the property.

Don’t Rely on the Seller’s Opinion of the Condition of the Property

Here are some basic rules-of-thumb:

• Don’t rely on the seller’s opinion or the broker’s opinion about the condition of the property.
• Check out everything that’s important to you.
• Ask a lot of questions and consider the source of the answer.
• Hire a good home inspector and seek further evaluation when recommended.
• Remember, the contract is the controlling document in the transaction. It stipulates what the seller and the buyer must do and when by which time they must do it.

Thinking of Buying a Home in Austin?

Our team of Realtors who specialize in buying a home in Austin can help! We have a combined 60+ years of experience representing home buyers and have the tools to help you navigate the process and get a great deal on an Austin home. Check out our Austin Home Buyer page to learn more about our team and the home buying process. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation conversation.