Understanding Disclosures

In addition to the "Disclosure Regarding Real Estate Agency Relationships" (see Understanding Agency), the State of Michigan requires every seller of a home to provide the following disclosure statements:

• Seller's Disclosure Statement
• Lead Based Paint Disclosure Statement

Seller's Disclosure Statement

As the name implies, the Seller's Disclosure Statement is intended to disclose information about the condition of the property of which the current owner is aware. Experience shows that the five most common defects in residential properties are as follows:

• Bad foundation
• Worn roof
• Radon
• Poor water drainage
• Inadequate systems (electrical, plumbing, heating and cooling, etc.)

Accordingly, particular attention should be paid to these specific topics when reviewing the Seller's Disclosure Statement.

Other important points relating to this document are as follows:

• 
  The items disclosed on the Seller's Disclosure Statement should be carefully analyzed and taken into consideration BEFORE determining what price to offer on a home, not AFTER. An unwritten rule of price negotiation is that if an item is properly disclosed on the Seller's Disclosure Statement, a seller will almost never allow that item to be used by a purchaser as "leverage" in negotiating a lower sales price AFTER the initial offer has been made. The most common example of this is a purchaser seeking to renegotiate a lower price after the inspection has been performed. As an illustration, assume a buyer has an inspection and the resulting inspection report states something like "roof is significantly worn and will need to be replaced within five years." Assuming this condition was properly disclosed by the seller on the Seller's Disclosure Statement, the purchaser will be fighting an uphill battle in attempting to renegotiate a lower price. The seller's very reasonable position will almost always be: "I properly disclosed that before you made your offer. You should have taken this factor into consideration when you determined the initial price you were willing to offer."
• Sellers complete this disclosure with varying degrees of honesty and candor. We always advise our sellers to complete this disclosure as honestly and as completely as possible, as you never want a prospective purchaser to have doubts about the homeowner's integrity. However, we know from experience that not all people think this way. Which is why we place limited reliance on this disclosure.It is only a guide - we never assume it is all-inclusive. This is precisely why we insist that you have both a complete "contractor's inspection" AND a radon test. THESE are the actions that you will take to protect yourself.

Lead Based Paint Disclosure Statement

The Lead Based Paint Disclosure Statement is intended to inform a prospective buyer about the potential existence of lead based paint in a home. Specifically, the homeowner is required to disclose whether they are (1) aware of lead based paint in the home, and (2) in possession of any records or reports relating to any lead based paint testing that has been performed. This disclosure is only applicable to homes built prior to 1978. Experience has shown that in our particular market very few homeowners actually test for the presence of lead based paint, and accordingly this disclosure typically yields no information of benefit to a prospective purchaser.

Read the EPA-prepared Protect Your Family from Lead in your Home for more information about the hazards associated with lead based paint."