What Mistakes Do Sellers Make That Cost Them?
Selling a home is a complex process that involves rules of disclosure and representations made by the seller. Accurate representation of the property is crucial to ensure you are not exposed to liabilities that can cost thousands of dollars to remedy. So, what are the most common mistakes we have come across? How can they be avoided?
I can’t tell you how many times sellers tell us, “there is no knob and tube wiring in our house”. They usually believe this either because they previously hired an electrician to remove it but the electrician did not remove it in its entirety or the previous owner told them they had it removed. Recently our buyer clients submitted an offer on a property conditional on a home inspection. We negotiated the price believing what the seller represented: that there was no knob and tube wiring present. The home inspection not only revealed knob and tube but also vermiculite insulation containing asbestos. The seller was unwilling to renegotiate the price and our buyer clients rightfully walked away from the deal. If buyers do not perform a home inspection before finalizing the deal, as our clients did, more often than not they will discover undisclosed problems at some point. This will only lead to one thing – costly litigation. To avoid this, sellers should perform a home inspection on their property before listing it in order to represent the property accurately. It will be the wisest $500 you will ever spend.
Another common problem arises when the seller fails to itemize the fixtures that are to be excluded from the sale. In its basic form a fixture is something that is attached and would cause damage to the property if it were removed. For example, a mirror hanging by a hook is not a fixture but one that is permanently mounted to the wall is, and should stay with the property. So what can you do to prevent such costly misunderstandings? Go through your house, room by room, and jot down every item that is attached but which you want to take with you. Make sure your agent notes these items as being excluded in the listing and in the agreement of purchase and sale. Pay particular attention to items that are easily overlooked such as a satellite dish, fireplace insert, speaker system, water purifier and even trees and plants you may want to take with you.
Do you have any rental contracts the buyer has to assume? Many sellers completely forget to mention that the furnace, security system equipment or the hot water tank is rented. The buyer will rightfully assume these items are owned and included in the purchase price unless you specifically note these items are rented and come with monthly payments which the buyer has to assume. Your agent should itemize these contracts on the listing and the agreement of purchase and sale.
The law requires the seller to disclose any latent defect which cannot be reasonably discovered by an inspection of the property by a qualified home inspector. For example if a seller covered up a large crack in the basement wall that is deemed to affect the structure, or constructed an addition to a house or built a garage and has not obtained the appropriate permits, the seller must disclose these facts. If the seller is aware of any health and/or safety issues such as the presence of lead based paint, toxic mold and asbestos they must also be disclosed.
The fact that the buyer may have performed a home inspection on your property before finalizing the offer does not necessarily eliminate your responsibility to disclose these problems.
These are just a few of many mistakes that can cost a seller thousands, even tens of thousands of dollars to remedy. Therefore it is critical to discuss these issues with your agent. Your objective should be to minimize the financial cost, yet abide by the rules of disclosure and representation. It is also advisable to give all this information to your agent, in writing, to avoid the “he said she said” trap which can only lead to litigation between you and your agent.
If you are unsure about the disclosure requirements then it is wise to contact a real estate lawyer.
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