Seller Disclosure Can Reduce Liability
by Thomas Kraeutler
Recently, I got an assignment from News 12 New Jersey television station to do a home inspection that would be aired live across New Jersey. To do this, I needed a house and a willing owner. I saw this as no problem. I'd offer a free professional home inspection to anyone willing to participate. I called some realtors to see if they had a house for sale whose owner would allow the televised inspection. At first, I had more offers than I could handle. Then, one-by-one, most backed out. Why? They were afraid if I found something wrong, they would have to disclose the problem to a potential buyer. In short, they were trying to avoid "Seller Disclosure".
"Seller Disclosure", the obligation of a home seller to tell any potential buyer about problems in the property, is only mandatory in several states. New Jersey is not one of them. However, it is rapidly catching on locally and many real estate companies are developing their own voluntary disclosure policies. The reason is simple -- disclosure - reduces liability. If a home buyer knows about a problem up front, then they can't later claim you hid it from them. A buyer can file a consumer fraud suit that can cost you three times as much as taking care of the problem in the first place. Avoiding disclosure is like crossing the street with your eyes closed - eventually you will get hit.
Seller disclosure not only includes a duty to disclose problems you know about, but it also includes responsibility to disclose problems you should have known about. "The days of caveat emptor (buyer beware) are over -- now it's almost seller beware", said Gordon Gemma, an attorney and director of real estate services for Schoor DePalma, a leading NJ based engineering consulting firm. "It's better that they know about a problem now and resolve the issue, then find out later from a lawsuit".
That is why sellers are smart to have a professional home inspection done when their house is listed. Home inspectors can identify problems, provide solutions and offer suggested improvements that can actually help you sell your home more quickly. If there is a problem, it's always better to find out now, rather than later, when a buyer is involved. This way you can elect to either fix the problem or disclose it. If you choose to make repairs, you can bet it will always be less expensive to do this before a buyer is involved. Buyers will usually want the top-of-the-line repair when an average quality job is good enough.
Also, most home buyers will eventually get an inspection before finalizing a sale, so having one done ahead of time will give a seller some idea of what to expect. There's nothing worse then bargaining down the price of your house to your bottom dollar, only to find out that the furnace is shot and the buyer wants a new one.
As the old football phrase goes -- the best defense is a good offense. Identifying and disclosing the condition of your house will not only help sell it faster, it will allow you to move on to your new home with far fewer worries.
Tom Kraeutler is a hands-on home improvement broadcast journalist and the kind of guy homeowners want to call at midnight when their basement floods. He earned his home improvement stripes as a professional home inspector, amassing over 20 years experience learning how houses are put together, and how they fall apart! Tom appears regularly on CNN, MSNBC, The History Channel, HGTV and the DIY Network. He's a columnist for House Beautiful and do! Magazine and his work has been featured in Smart Money, Reader's Digest and in hundreds of daily newspapers across the nation. 
