What is a seller’s statement of property condition you might ask? A seller’s statement of property condition is a document that a seller is asked to fill out prior to coming to market. The purpose of the document is to educate a prospective buyer of the general condition of the home being sold based on the seller’s knowledge of the home. This goes on the assumption that the seller has lived in the house and should know the most about it. If it is an investment property or the seller has not lived in the house they may choose to not fill out the document. Without first person knowledge of a home’s condition, not filling out the document may be a good decision. An example of a sale where the seller may not want to fill out a condition statement is an inherited property. If you inherit a property and have never lived in the home, why and how could you attest to the history or condition? How old is the roof? Has it been replaced recently? If so, when? Has any work been done to the house that requires a permit? How old is the furnace? Has the house had water in the basement? If so, how often? Was it due to a specific storm? How long have you owned the house? What are the operating costs? Gas? Electric? Have you made any improvements to the house during your ownership? Are you aware of any easements on the deed? Is the house in the flood plain? The list of questions goes on for several pages. I think you get the general picture of what the document asks a seller to disclose.
One may ask, why would I ever fill that document out? You fill it out because it ideally discloses every attribute of the house that may impact the consumer’s perception of value. I would argue, although I am not offering legal advice, that by filling it out, it actually removes liability from the seller. The key is to fill it out truthfully. If filled out truthfully, it is an amazing document in my opinion. It can offer a sense of security to the buyer as it allows them to understand what the seller knows about the condition of the house which often impacts, in a positive way, what they offer for a home (whether the items disclosed are good or bad) simply because they understand the home’s history. I want to be clear that the document does not warranty the condition. Nor does it make promises about the future condition of the house. A seller has no liability (unless they chose not to disclose a pertinent defect in the home) as it relates to the future condition of the home they sell. In fact, an attorney drafted purchase and sale agreement has specific language protecting sellers from future occurrences or defects that may arise. When a buyer buys a home they buy it having received the opportunity to inspect the home or the buyer has removed their ability to inspect a home as a condition of an offer. When buyers sign a purchase and sale contract they are relying on no one as it relates to the condition of the home. They are choosing to move forward to purchase having had the opportunity or given up their opportunity (as a condition of the offer made) to understand the home’s condition.
Another compelling reason to fill out a condition statement is because it is an industry standard. The buyers in our market area expect to review one. The buyer’s agent expects to review one. You may say who cares! I would say that by not filling one out it raises a lot of questions. It happens occasionally and buyers often think it is strange. Hmmm, why is the seller not filling one out? Are they hiding anything? The sellers of the other homes we have looked at filled one out. They may ask their agent if they think that is a bit odd. Their agent may in fact find it odd. Get where this is going?
My dad would often say to me that “Clarity is the friend of business.” I believe he was correct. It is from my experience as well. I can sell any piece of real estate. Any! I just need to know what I am selling.
Continue enjoying the Summer. It will be behind us before we know it.