The Many Disclosure Forms of a Real Estate Transaction
Every real estate transaction involves trust, the firm belief in the reliability of the other party.
Buyers must trust that the property is as presented by the sellers, who in turn must trust that the buyer can pay the agreed-to sales price when they say they will.
And when a real estate transaction involves a real estate agent, the client places their confidence in another person. The brokers, inspectors, escrow companies, and everyone involved must trust each other to deal honestly and fairly with each other.
This is what it takes to make a successful real estate transaction, and to ensure this continues, required disclosure forms document the sharing of information so that both parties can affirm their trust in each other. It may seem excessive, yet when information is withheld from a party in a transaction, typically, that party will feel their trust was betrayed. Disclosure of all information and related facts about a transaction is the best way to keep that trust before, during and after a transaction.
Before? That's right, before.
The timing of the disclosure is as critical as the information provided in the disclosure itself. These forms, and the disclosure of the information they contain, must be timely and made far enough in advance that the client can make an informed decision. It can be daunting when wanting to change your mind about a transaction only to discover you face adverse financial consequences.
That is why, the sooner disclosures can be made about a property, the better it is for the client. Clients should feel that trust that everyone is providing them with the most updated and accurate information as soon as possible. This will build their expectations around the disclosures instead of constantly changing a client's expectations once they are set. If clients' expectations are forced to change, they often lose their enthusiasm for the transaction, and for the other party involved.
Remember that trust that I keep mentioning? At this point, it's lost if not handled correctly.
I think it's important to note that the area of nondisclosure and misrepresentation cause more liability for the broker than any other. That means the real estate agent has the most to lose by improper disclosure.
Agents whose failure to disclose leading to misrepresentation claims make up more real estate disputes than all other complaints combined.
Of course, many lawsuits are brought by buyers against sellers as well, alleging that they failed to disclose pertinent facts about the property, but brokers are almost always involved as well. Lawsuits, even if unfounded, will drain resources from the actual business of selling real estate and can even put a brokerage firm out of business.
In my opinion, always trust the broker who discloses, because those are the brokers who care to protect their own business by following the law and protecting everyone involved with that trust.