Is There Such a Thing as TMI (“Too Much Information”) on the Seller Disclosure? (Hint: “No”)
I don’t know about other parts of the country, but here in conscientious, neighborly Minnesota, home sellers are more likely to volunteer too much information rather than too little on the required state disclosure form.
As their Realtor, I’m fine with that: as I like to tell clients, “no one ever got sued for something they told the Buyer about.”
That said, there are some general parameters about what to include in the Seller Disclosure.
Rule of Thumb #1: it’s not what the Seller thinks is relevant; it’s what a reasonable Buyer would.
Translation: “when in doubt . . . disclose.”
Or as I (also) like to tell Sellers: the answer to the question, “Do you think I should tell Buyers about the . . . [fill in the blank]?” is invariably “Yes.”
Buyer Wants vs. Needs
Which brings up Rule of Thumb #2: in general, the purpose of the Disclosure is to tell Buyers about material issues that could affect their use or enjoyment of the home.
So, the ice dam that leaked through the Dining Room ceiling in 2012 is relevant.
That’s true even though the Seller had the damage professionally repaired, subsequently installed heating cables on the roof, and has had no more problems (all of which they should also include in their disclosure).
At the other extreme was the recent Seller who was concerned that his home only had 14 gauge wiring instead of the more modern 16 gauge.
In 13 years selling real estate in Minnesota, I’ve never seen that raised as an issue by either a city or private home inspector (or frankly, even heard the term).
Ergo, it’s not a concern.
Ditto for the dated Kitchen (plainly visible), loose door knob (not material — but still fix it), or squeaky stairs (same).
Seller’s Best Friend (Really): the City Inspector
While Sellers typically regard the city inspector as a demanding, fussy foe, I encourage them to instead think of them as their friend — often, their money-saving friend.
That’s because a passed point-of-sale inspection allows Sellers to characterize any subsequent, Buyer-raised issues as “wants” rather than “needs” (note: city inspections are much less rigorous than private home inspections).
Will such a tack fly?
It all depends on the two parties, and their relative motivation.
However, one more rule of thumb usually governs such inspection negotiations: if the deal falls apart over the issue(s), is the Seller obliged to update their Disclosure before they put their home back on the market?
If the answer is “yes” . . . the Seller should expect to either fix the item(s) or reduce the sales price (if not for the current Buyer, then the next one).
If the answer is “no,” the Buyer is typically out-of-luck (and gets to decide whether it’s worth jeopardizing the deal over).
See also, “The ‘What-Will-the-Neighbors-Tell-the-New-Owner?’ Disclosure Test”; “The TOO Clean Seller’s Disclosure“; and “How to Blow a Seller’s Good Will ” and $150 Closing Gift.”
Plus: “Reason #38 Not to Nitpick on Inspection“; “Inspection Addendum: ‘Seller to Power Wash Garage Floor”; and “The Difference Between a Home Inspection Addendum and a Repair List.”
