You SHOULD Always Fully Disclose - So Be Picky When Buying To Avoid This Problem.

Interesting article reprinted below regarding Seller's Property Disclosures and their effect on selling prices. Not surprisingly when the law forces sellers to disclose certain adverse aspects of their home - like flood zones, or noise zones the sell price takes a pretty significant hit.

OK why to care? Well if you're out BUYING a home you want to be extra careful here. I work with builders and SOME will say - I can buy lots for HALF the cost in a 1% flood zone than ones that are out of the flood zone. They think buyers won't care and in many cases they do not - but once it is on a disclosure statement - as the article clearly shows - it lowers offering price buyers are willing to pay. So even though you like a particular home consider that laws regarding disclosure are ALWAYS going to grow MORE stringent so if you have a choice, and you are concerned that something about a home will later hit you in the pocketbook when you have to disclose it - walk away. In the current market there are so many homes available you needn't feel pressured into buying anything like that.

By the way, when you are selling, work with a good realtor who knows the laws about disclosure and ALWAYS disclose any adverse items, even if you think it is going to hurt your pocket book. Avoiding a lawsuit or having a deal go south is worth a lot more than any concession you may need to make. Plus - hey it's the RIGHT thing to do! - Mike W

MORE DISCLOSURES = LOWER PRICES

Disclosure laws that require sellers and real estate practitioners to provide prospective buyers with information about a neighborhood - like whether it is in a flood zone or an airport noise zone - decrease property prices by thousands of dollars, according to two studies from Virginia Tech University. The studies examined housing prices a year before disclosures laws were passed in North Carolina and a year later. Homes near the Raleigh-Durham International Airport already sold for 4 percent less than comparable homes in parts of town farther from the airport. A year after the disclosure law went into effect, prices dropped an additional 3 percent, according to Jaren Pope, assistant professor of agriculture and applied economics at Virginia Tech. Likewise, there was no substantial price difference between comparable homes in North Carolina that were in a flood zone and those that were not until the state legislature required home owners to disclose this information. After the law passed, houses in flood zones lost an average 4 percent in market value. Pope says similar disclosure laws have been passed nationwide, but there is no standard, so the specific tenets vary not only from state to state but also from county to county.

Source: Virginia Polytechnic Institute and State University (10/16/2007)
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