As with buying a home, those selling one have much to consider. Accurately pricing is the first step.
Once again, the internet is awash with all manner of algorithms and information about how to price a home, usually focused on simple price per square foot. Yet price per square foot is only one factor.
Neighborhood, neighbors, recent upgrades, deferred maintenance, proposed developments nearby and proximity to services all play an equally important role.
The first three to four weeks that a home is listed are critical – this is the time that sees most interest and inquiries generated. Statistics show that homes listed over market value quickly become stigmatized and lose out on this initial wave of attention. Similarly, an underpriced home can raise red flags, real or imaginary.
For the purposes of this article, however, let’s assume that after appropriate advice and consultation, you’ve listed your home and received an offer that is acceptable to you. What’s next?
One of the cornerstones on which Colorado real estate law is built is disclosure. Failure to disclose latent defects affecting a property can have dire legal and financial consequences. The law requires disclosure of any material fact concerning the property that an objective buyer would attach importance to. This includes events and items such as prior leaks, flooding, faulty heating systems, zoning violations and environmental conditions.
Disclosure of any such defects early in the process removes the seller from any ongoing liability after the sale has been completed. While it might be tempting for a seller to think they can sweep the information about the roof leak they had fixed last summer under the rug, if they don’t tell the prospective buyer, you can guarantee the next-door neighbor will, once the new owner has moved in.
This obligation to disclose extends to the agent representing the seller. While an agent is not obligated to conduct their own investigation of the property, they are required to disclose any material fact concerning the property of which they have actual knowledge.
While a seller may understandably be reluctant to disclose that their basement has been known to flood during a heavy rain, or that running the dishwasher at the same time as the microwave causes the electrical system to overload, such facts are far better being put out in the open.
While such disclosure may result in a prospective buyer losing interest in the property, most buyers will be grateful for the seller’s honesty, and the level of trust necessary between the parties to the contract is enhanced.
Factors that do not need to be disclosed are those that may psychologically stigmatize a property, for example a death or illness in the home or a felony committed there.
Aside from that, what should you disclose? Well, pretty much anytime a seller finds themselves thinking “I wonder if I should disclose X,” the answer is: Yes, disclose, disclose, disclose.