The Michigan real estate market has been in a frenzy. While the MLS listings are limited, the demand for houses has grown by leaps and bounds. Undisputedly, Michigan has become a sellers’ market. Sellers could make use of this trend most for their benefit and save thousands of dollars. Increasing numbers of owners are going the For Sale By Owner (FSBO) way. While FSBO sellers pay a flat fee to get an MLS listing, there are other aspects that they have to consider before listing their home, since there is no full-service real estate agent to help them with the documentation.
In Michigan, it is necessary to submit a Seller Disclosure Statement before the closing of a deal. Its submission is obligatory under The Seller Disclosure Act of 1993. Sellers disclosure Michigan or Michigan Seller’s Disclosure Statement (SDS) is a list of conditions in the property which could affect the house sale negatively. It is a disclosure of the physical, civic and environmental issues with the property. The homeowners must pay attention to this piece of document and submit it as soon as possible before the closing of the deal to protect themselves from further litigations from the buyers.
A. It is a must to prepare sellers’ disclosure Michigan document, here’s why
1. Immunity against buyer suits post-sale
If the sellers put everything in writing about the condition of the property, as known to them it protects them against if buyers raise concerns about certain factors in the property and then sue the seller. The sale becomes stress-free and profitable for both parties if there is 100% transparency about the property and its history.
2. Trust building and credibility
Most real estate transactions are based on mutual trust and goodwill. Hence, it is necessary to build credibility from the beginning itself to make sure that the deal closes smoothly and that it is a win-win situation for both.
An SDS will give complete and correct information about the property which will help in staging, pricing, and closing.
B. Contents of the Seller Disclosure Agreement
1. Property-related concerns
Michigan has a strict and detailed SDS which contains a special section for property-related concerns which are to be addressed honestly as per the knowledge of the seller. In this section, it is important to declare if there are any leakages, seepages, issues with the heating, any concerns related to the basement, or any incident of termites. The list goes on as it asks sellers to highlight the basic issues related to the property and sellers are required to fill in information about safety warranties that are about to expire.
2. Environmental hazards
The subsection in part one of the Sellers Disclosure Act is devoted to the declaration concerning environmental hazards like floods and exposure of the house to lead-based paint, formaldehyde, and radon gas, among others. Michigan Seller Disclosure Form has been given a separate section to inform about the lead paint hazard and it applies to a property constructed before 1978. The document demands agreement by the seller, buyer, and the realtor who has to sign the form.
3. Information about amenities in the house
Sellers have to give the status of any electrical appliances which will go to the buyer with the house. There are about 32 items listed on the document including electrical appliances and the sewage system.
It also asks if the property has an airport, farm, or a shooting range in its vicinity which would create some level of noise pollution for the homeowner.
4. Pending litigations, if any
It is important to note that the sellers need to disclose if there are any ongoing suits and land disputes. It also asks sellers to mention encroachment-related issues if any. Sellers also have to give detailed information if the house was damaged by flood, fire, landslides, or any other climatic calamity.
C. What happens if sellers present incorrect information on the Seller Disclosure Agreement?
If the buyer finds out that the seller has lied or given incorrect information about the material defects in the property before the sale, they can terminate the agreement with immediate effect.
If an issue with the property arises after the sale, which doesn’t correlate with the Michigan Seller’s Disclosure Statement (SDS) then the buyer can sue the seller for misrepresentation or omission. But the catch here is that if material defects happen after the sale, then the seller is not responsible for the same. Also, there is a section in the agreement to safeguard the seller’s interest. It says that the information submitted in the agreement is to the best knowledge of the seller.
Even though it is important to inspect the house before the MLS listing, it is not mandatory for the sellers as there is a disclaimer at the end of the Seller Disclosure Agreement stating that the seller has revealed ‘the best information available and known’.
It becomes a buyer’s prerogative to do a detailed check before locking in the property to avoid further discrepancies. Sellers also have a responsibility, to be honest about the condition of their house and submit the Seller Disclosure Agreement the earliest so that it builds trust and the transaction is sweat-free and profitable for both parties.
D: How to ensure clarity in Sellers Disclosure Agreement?
Many sellers in Michigan are going for FSBO free listing which means that they need to take total control of all the formalities associated with the selling of their house. Homeowners have to present a detailed Sellers disclosure Michigan and here is how you can ensure a smooth submission.
1. Hire an expert
Though not mandatory, it is always a good idea to hire a home inspector to review the property. Problems highlighted by the expert could be fixed or submitted in the SDS. This would ensure no last-minute surprises for buyers and eventually a smooth sale.
2. Submit SDS well in advance
Submitting SDS well in advance shows preparedness and integrity. If the buyers get the disclosure agreement beforehand, they are well-equipped and there is certain ease between the buyer, seller, and the agent (if any) pre and post-sale.
3. Be honest
It is very important, to be honest about the condition of the property for sale. Misinterpretation or omission of material damage to the house can cause sellers a lawsuit, according to Michigan law. Being truthful at an outset builds credibility which is important if you want buyers and agents to take you seriously.
It is a sellers’ market in Michigan and hence more and more individuals are opting for FSBO free listing options this leaves them with complete autonomy over the deal. It also increases complications for FSBO sellers concerning certain legal aspects associated with Michigan real estate. SDS is an important part of the documentation and a seller must submit it on time.
Flat Fee MLS Michigan companies like Houzeo are of help for first-time FSBO sellers as they can pay for their platinum package and avail services of a full-service virtual real estate agent who can review the document in depth.