Disclosure is a big part of the process of buying or selling a home. No matter if you are the Realtor, the client, or the lender, there are things you need to pass onto the other parties involved to ensure a smooth transaction.
Let’s break down what each person involved needs to disclose, how to work with the other parties to make the selling and purchase of a home as simple as possible, and why the Realtor garners much of the responsibility when it comes to disclosure.
Home Seller
The home seller’s biggest disclosures will be about the state of the home. This includes any upgrades that have been made as well as any material defects the home may have.
A material defect is anything that could significantly impact the market value of the property being sold. This could include:
- Plumbing issues
- Roofing concerns
- Mold
- Lead paint
- Electrical issues
- Foundation problems
Other types of seller disclosures may include deaths in the home, whether the home has an HOA (Homeowner’s Association), and if the home may be in a nuisance area due to excessive noise, etc. As a Realtor it’s important you keep your clients aware of what disclosures their state requires and have them sign a disclosure form, if needed!
Remember, even if it doesn’t have to be disclosed, a standout Realtor will encourage their seller to disclose anyways. After all, if the seller chooses not to give all the information possible, then someone else like a nosy neighbor or even a well-intentioned mail person may let something slip which could result in a lost sale or worse yet, legal ramifications. It’s best to be as straightforward as possible from the start.
Home Buyer
While a home buyer won’t be disclosing anything on a home, they will have to disclose a certain amount of information to their lender and to you (as their Realtor). Here are some examples of what clients will disclose and why:
- Employment Information: This includes the name and phone number of their employer as well as how long they’ve been working there and what their salary or hourly pay is, as well as any bonuses they receive. At Churchill, it’s important for clients to have a work history of at least two years to be well qualified for a loan.
- Financial Information: Clients need to disclose any debt they have including credit cards, student loans, car loans, and any outstanding bills. They will also share banking information including checking and savings accounts and any other aspects of a financial portfolio that can impact the sale. This helps to determine the debt-to-income ratio of a client.
- Personal Information: Clients need to share their personal information with their Home Loan Specialist and potentially their Realtor. This includes private information such as their social security number. This will help the Home Loan Specialist pull credit reports and other information that will help determine the amount of money the client qualifies for.
To do your job well as a Realtor, you need your clients to be forthcoming with both you and their Home Loan Specialist. It’s important all the information you receive is truthful and up to date, and the clients listen to what their Home Loan Specialist tells them. For example, if your client chooses to buy a new car a week before closing on a home, it could make the closing difficult, as their debt-to-income ratio has now changed greatly!
Lender
A mortgage lender is an integral part of the home buying process. Lenders determine how well qualified clients are for a mortgage, what type of loan is best, and the amount of money that can be borrowed to buy a home. Because of the important role of the lender, we are required to disclose things as well. For example, a lender will need to disclose the loan estimate and any fees associated with it. In addition, there are state and federal regulatory disclosures that all mortgage lenders need to use for any loans and marketing associated with their business.
Realtor
As a Realtor, it’s imperative you are always upfront with your clients. This means letting them know of any other offers on the table for a home, as well as being thoroughly educated and knowledgeable on what they need to do to secure a home purchase or sale. Your disclosure responsibility also circles back to the disclosure statement regarding material defects of the home, along with the age and address of the property.
As a Realtor, you understand the importance of being straightforward and keeping things simple. Churchill Mortgage believes the same. By putting people on smarter mortgage plans with easy-to-understand steps to follow, your clients can feel confident in the loan they’re taking on, and at home in the house they’re buying. From helping clients understand their debt-to-income ratio, to being there on closing day, we’re committed to putting people over profits, and to helping you succeed as a Realtor.
