How important is the Seller's Disclosure?

Posted by Gary Hoeferkamp, April 10, 2023

When I began selling homes 33 years ago, the written disclosure form was just beginning. The obligation for home sellers to disclose known defects is baked into Missouri laws, and this form is the avenue to do so. It has grown over the years into the current 6 pages, plus pool/ spa and septic/ well addendums, covering all the systems of the home, including if they were a meth lab! (I have run across 2 disclosures checked YES on that - my buyers left quickly). Builders, foreclosures, flippers and sellers that have never occupied the home typically will not provide one, or a shortened version. I always encourage my sellers to complete one, even if they never lived in the home, such as inherited property, and answer as many questions as they can. The buyer will then get a better perspective of the property, be more likely to bid higher, and feel more comfortable curtailing or even removing their inspection rights. With "as-is" sales, the seller does not get a free pass, they still need to disclose known defects, even if they never lived in it.

Over the past 3 years with the market becoming so seller-friendly due to high demand and low supply, the number of offers with restricted inspection protections or waived entirely, has grown substantially. Years ago, this would only happen with investor buyers who were very familiar with home repairs and planned on doing extensive renovations anyway. However, with the average home buyer now moving into homes where they are less reliant on inspections and repairs, they are much more in tune with the seller's disclosure. Hence the need for sellers to complete them as fully and accurately as possible. I expect a correlation between restricted or waived inspection rights more common today, and buyer dissatisfaction in the future, once problems with the property arise after closing, whether the sellers knew about them or not. If the buyers wish to pursue a complaint after closing, the disclosure will be one of the main exhibits.

I just ran across an arbitration summary from residential sale complaints in 1993, and I expect the ratios to be similar today: Of 23 categories, the top 5 issues were basement water 27%, roof 15%, structural 12%, sewer/ septic 11%, and furnace/ fireplace/ A/C 10%. That is 75% of the problem areas. The median claim by the buyer was $5000 back then (over $10,000 today), and over half received a partial or full award from the seller.

Yes, the disclosure is more important than ever - for a buyer to make an informed decision on their purchase offer; and to reduce the seller's liability. It has become an integral part of the transaction.

Here is an update on local, existing home sales activity as of yesterday:

• Manchester had 3 homes available and 22 under contract
• Ballwin had 12 homes available and 42 under contract
• Kirkwood had 11 homes available and 48 under contract
• St Peters had 13 homes available and 50 under contract
• Arnold had 9 homes available and 23 under contract
• Florissant had 41 homes available and 103 under contract

The ratios run from 2.5 to 7 pending sales for every 1 available. Adding the total of these 6 areas is 3.2 pendings to every 1 available. My last comparison of these areas in early Feb was 2.1 to 1 (and 2.8 to 1 last June) with the available home supply DOWN 25% from February. The market has clearly gone back, at least for now, to a strong seller's market. Florissant firmed up dramatically since January when there were more available than pending, but has flipped to 2.5 pendings for every one on-market. The silver lining for buyers is that I while I am seeing alot of competing offers, they are not in the double digits like last spring. I am also seeing less frenzy-buying, and buyers being more choosey on condition and contract protections, where last spring they were bidding on everything and giving up more protective clauses.

I am looking to add a full time, licensed agent. Perfect for someone wanting a small office culture with easy broker access, no office politics and many learning/ sharing opportunities!

Now Showing:

• 3721 Hawks Rest Rd, Wildwood, $449,000: 1.5 story on 4.5 acres boasts 3446 finished square feet on 3 levels with 4BRs, 3 full baths, large kitchen, hardwood flooring, screened deck, finished walk-out lower level!
• 1011 Sulphur Spring, Ballwin, $110,000: Building lot on 2/3 acre with sewer hookup and gentle slope in Parkway South schools!

Under Contract:

• 734 Memoir Ln, Manchester, list $379,900 - competing offers
• 1832 Ridgeview Circle, Manchester, list $285,500 - multiple offers

Coming Soon:

• 2 story in Wildwood: 3000 finished square feet, upper $400s, will begin showing April 15 weekend!