House Talk Episode 36 – How Seller Disclosures Work with Angie Arnett Prinicipal Broker of Bend, Oregon Hasson Company Realtors
Karen Malanga: Hi, this is Karen Malanga with another episode of House Talk.
Today is going to be a special episode because we actually have Angie Arnett. She is my managing principal broker, so I always look to her as—she’s actually kind of my boss. I go to her for advice. She does a terrific job of managing the housing company over here in Bend.
So, Angie, I think today you mentioned that you wanted to speak to seller’s disclosures.
Angie Arnett: I think that people kind of overlook the importance of seller’s disclosures sometimes. They think it’s just a little piece of the puzzle that just needs to have some boxes checked and move on and sign off on it, when in fact, there’s a lot of different intricacies to how the seller’s disclosures need to be handled in a transaction.
So, for instance, as a listing broker, you know that you usually give these documents to your seller way ahead of time to start filling out. And oftentimes, many listing brokers—not you of course—look them over once and then pass them on and never really double check the answers, when in fact, there are five full pages and at least 60 questions on those pages that have to be answered. And sometimes, the sellers don’t know exactly what they are checking or not sure of how to check it as you well know.
Karen: Yeah, especially like in that water section. I always get a phone call, “Karen, does my water require a permit?” and I’m going, “Well, that would be a well.” It does take some explanation.
Angie: Of course! You have the first section that says they have legal rights to sell the property. And oftentimes, there’s maybe somebody involved that was a deceased family member that’s not off of the title. So you run into little issues along the way that nobody really thinks of until you’re in the middle of a transaction.
So, oftentimes, as you are well aware of (and doing a very good job at), checking those boxes ahead of time.
The other important thing is there’s a right of revocation that goes with these seller’s disclosures. And that starts the very first day those disclosures are delivered to a buyer and their buyer’s agent after there had been mutual acceptance of an offer. Many people get that confused and think just because they handed before an offer is actually solidified and ratified that the 5-day right of revocation starts ticking, but it does not until there’s an accepted offer.
Karen: And by right of revocation, you mean that that allows the buyer the right to pull out of the transaction?
House Talk - Bend, Oregon Real Estate with Karen Malanga
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Angie: Correct! They have five business days to pull out of the transaction once they receive and review the seller’s property disclosures. They don’t have to give a reason. It doesn’t have to be because a box wasn’t checked or because they don’t trust something the seller said. It can just be…
Karen: Just because.
Karen: Yeah, we’ve run into that. And there’s really nothing on the seller’s disclosures that would warrant any concern on a buyer’s part, but they just used that to pull out of the transaction.
Angie: And oftentimes, people do want an explanation, but we from our office standpoint, company standpoint, say, “The least amount of words, the best.” It doesn’t have to go into back and forth, the ‘he said, she said’, the why’s and the wherefore’s of why somebody wants to pull out.
Angie: And then, along those lines, additionally, I think buyers also get confused on signing the paper works and they’re just accepting what’s said there. And it’s not that the sellers are providing a warranty and the buyers accepting the warranty of these check boxes. It’s more so just “Here’s a statement of what we know about our house.”
Karen: And then, by the buyers signing it, they’re just really showing us that they did receive it and that they’ve read it.
Karen: Yeah. Yeah, I go through that a lot. It’s like, “Well, I don’t want to sign this seller’s disclosures because it says that the roof leaked and I want to know more about that.” I said, “Well, that’s not why you’re signing the seller’s disclosure. We’re just showing that you received it, we’ve reviewed it. Now, after we have this part behind us, we will go investigate what went on with that roof and request an explanation.”
Angie: Yeah, for sure. That is why we always say, “This is just something that the seller is saying, ‘Look, this is what I know about my house,’ but now, you buyer, can go and have your own inspection and see if these items match up.”
On a little bit of the flipside of that, I often run into the seller saying, “Well, my roof leaked like six year ago, but that’s kind of a long time ago, so I don’t really want to check that box. It doesn’t matter anymore because it doesn’t leak now.”
Karen: I run into that all the time. But it did leak!
Angie: Correct! So, they need to check that box. Additionally, we have, as you know, with the company an addendum that says “further explanation” on the boxes that we have, answers to them. We just say, “When in doubt, disclose, disclose, disclose.”
Angie: …which is another item that I don’t think people realize in the state of Oregon. The buyers can go back on a seller for up to seven years if they believe that the seller misrepresented them on their form, on that seller’s disclosure form.
Karen: …intentionally misrepresented.
Karen: And I also run into problems with older clients not really understanding the whole concept of what they should disclose and what they shouldn’t disclose or even getting confused when they’re filling out the forms. I’ve been asking other family members to be a part of those sessions and those meetings.
Angie: Yeah, definitely important, to make sure all the i’s are dotted and the t’s crossed and all that…
…which also then goes to speak to the very first section that says if an heir or a trustee is selling the property, they then become excluded from answering all the rest of the questions on the five pages.
But I always give a little bit of a caveat warning on that, that if somebody actually grew up on that house, for instance, and now they become the power of attorney or the executor of the state, they truly are probably aware of some things that have happened to that home. So I usually make that type of party to the transaction still disclose anything that they may have known like was there an oil tank buried on the property at some point.
Karen: I do that too, Angie. I like to follow your guidance and Hasson’s guidance. And really, I always encourage my sellers to tell me everything. Let’s just get it all out and tell them everything because if you’ve had a problem and you fixed it, what’s wrong with that? We all have problems. There are all kinds of stuff that happen.
Angie: Of course, they don’t want to explain that and something comes up during an inspection, then it looks like they’re just hiding something.
Karen: And then, “What else are they hiding?” Yeah, it’s a big ball of wax.
Well, Angie, thank you so much for being a part of House Talk today. I really appreciate you coming on. I know how busy you are. Thank you, Karen.