Colorado Sellers Property disclosure. What is legally required? What is advisable?
1. As the Seller,you must disclose any material defects known about the property. These are things like roof leaks, foundation cracks, heating system not working. They reduce the desirability and the value of the property and even more so since 2013, these defects may affect the buyers ability to get a mortgage on the property. There is a Colorado Real Estate Commission form for this (Colorado Sellers Property Disclosure) and while it is not mandatory, if you have owned and lived in the property, it is a red flag to any buyer if you do not fill it out.
2. You must also disclose things like zoning issues, methamphetamine issues on site and the source of water for the property.
Sellers, here is the deal: If you give a potential buyer all the information you have about your property, they will not only thank you, but they will trust you. They will not only trust you, but if they are in the more than 80% of Americans who react to gifts by wanting to give in return, you are likely to benefit from your honesty too.
Cultivating a trustworthy relationship and being honest from the get-go will lead to a smoother transaction, a win-win negotiation and a much reduced chance of the deal coming unraveled along the way.
How can you use your Colorado Sellers Property Disclosure to attract the best buyer, build credibility and trust, enhance your negotiating position?
One option a Seller has is to have a pre-listing inspection performed at the property. This provides the Seller with information they can add to the Colorado Sellers Property Disclosure, it gives the Seller the opportunity to address issues with the property in a more relaxed manner and to price the property accordingly.
I always recommend placing a copy of that pre-listing inspection on the kitchen table. Use it to attract potential Buyers, then entice them to stay a while longer – to sit and relax a few minutes more in your home. You want them to linger and giving them the Sellers Property Disclosure along with the inspection report is a justifiable reason.
If the Buyer appreciates the added info and trusts that the Seller is an honest and responsible owner, he/she may even opt not to have an independent inspection conducted after going under contract. There is less negotiation on price and even less of the “nickel and diming” that drives Sellers nuts during the inspection period.
Surprising or unresolvable inspection issues are the number one reason that a contract to buy in Colorado, is terminated. If managed well, inspection needn’t be a precarious time!
Speaking of surprises and disclosures…
What about issues that result in stigma at a property? Do they need to be included in the Colorado Sellers Property Disclosure?
You know the sort… A crime was committed, someone died on the property, granny swears she sees a ghost there!
A ghost is not considered a material defect in the property… But if you’ve heard about it, the neighbors probably have too – or at least think they do. It’s juicy and makes for good conversation. Do you want your neighbors to be in control of that conversation or are you going to take control of it? A smart seller will be proactive, rather than reactive. Get ahead of the issue and make it part of your Colorado real estate disclosure. Take just the FACTS and submit them too the buyer, but be sensitive about your delivery! There is a scary way to say things and a reassuring way to present the same information. Your agent can help you work on the disclosure method so that you come out better off and the buyer feels good about their decision to purchase your property.
What are the facts?
1. “There is a ghost in the house!” NO
2. “I have heard neighborhood rumors of a ghost around here. I find it fascinating but have never seen anything myself.” MAYBE
In the event a crime has been committed in the house, I would probably disclose that too. Buyer’s Google things. Beat them to it and earn a reputation for being forthcoming.
No… You are not required to disclose that the last owner died here after battling AIDS.
Yes, if the seller or anyone who visited recently has tested positive for measles, you absolutely should advise folks before showing the place! (Or hold off on showings a few weeks.)