Many home sellers use a listing broker to assist with the sale. The broker will help the seller set the right asking price for the property, communicate with potential home buyers, and overall put the seller more at ease with the home sale process. Although that broker’s primary duties are to the seller, and the buyer typically hires his or her own broker, the listing broker must also play a role in making sure that the buyer is adequately informed about known issues concerning the physical condition of the property, as discussed in this article.
The home seller is, of course, likely to know more than anyone about the property’s physical condition, and in the state of Washington, as in many other states, home sellers are required to disclose such information to prospective home buyers, specifically any defects or potential problems. Washington law provides a comprehensive overview of areas that sellers must address when providing such disclosures to a buyer, which must be done within five business days of both parties signing a written agreement for the property’s sale and purchase. (See “Residential Home Buyers in Washington: What Can You Learn From Seller Disclosures?”
But the seller may not know or observe everything, which is why brokers are also given certain duties to tell what they know, and buyers are advised to conduct home inspections.
A common misunderstanding among home buyers is that the listing broker only has a duty to the seller in a home sale transaction, and therefore a buyer is sure to “get ripped off.” Luckily, this is not true. The listing broker is, legally, an agent for the seller of a property, meaning that the broker does have a duty to act on behalf of the seller’s best interests. The broker is also, however, a licensed real estate professional and has separate legal and professional duties to not misrepresent a home to a buyer. Because of these obligations to both parties, especially when it comes to information about the physical condition of a property, a competent listing broker can be very helpful during the home sale process, by making sure a seller discloses what he or she needs to, and that the buyer gets information about the property’s condition.
For purpose of understanding a broker’s obligations to disclose information about the physical condition of a property, it might be helpful to think of a broker as someone who is looking out for the best interests of the property itself. While this is not true in the legal sense – as in, the broker certainly does not owe a legal duty to the home structure – the broker wants all known issues about a property out in the open so that they can be contemplated, repaired, and dealt with, and the parties can complete their transaction.
Although a Washington broker has disclosure duties, buyers shouldn’t expect a complete set of disclosures about the property from the listing broker. The broker must disclose only “material” physical defects of a property that the broker actually knows about and that would not be apparent or readily ascertainable to the buyer. There is no set method or deadline for how or when a broker must disclose these defects: The broker must simply ensure that they are disclosed either within the seller’s disclosure statement or otherwise, by either the seller or the broker.
A material defect is one that a buyer would consider important in determining a property’s value, because it would have a potentially significant negative effect on that value. For instance, if there is a nail hole in the wall of the living room of a home where a picture once hung, this is not a material defect. If, however, the walls of the home are infested with termites, that is a material defect.
As to the requirement that a Washington broker disclose only material defects that are “not apparent or readily ascertainable,” this means that the defect must be one that a buyer is not likely to observe on his or her own. This saves the broker from being legally required to point out larger, obvious issues that a buyer should notice. As an example, if a broker and a buyer arrive at a home together and, upon arrival, they cannot enter the front door because the front porch has collapsed, this fact should be apparent to the buyer and therefore not something that the broker would be legally obligated to disclose.
Just by being present in a home and approaching it from a fresh perspective, a broker may notice details about the property that the seller has overlooked. In the course of any given day, a broker may, for instance, read information about the property in the local newspaper; hear about its history at a dinner party; notice something awry while walking into the home; or answer a question from the seller regarding whether to list a specific defect in the seller disclosure statement. Any of these scenarios would bring a physical defect to the broker’s attention and into the realm of things the broker would have to disclose to the buyer. (See, Revised Code of Washington, Sects. 18.86.010, 18.86.030.)
However, the Washington broker has no obligation to make an inspection of the property to find all potential issues. This is why it is still important that the buyer utilize the services of a professional home inspector (or two) to gather complete information on a home’s physical condition.
Additionally, while the home seller is required to provide the buyer with a seller disclosure statement, the broker does not have a duty to review and verify every detail that is (or might not be) provided in the disclosure statement. The broker is still, however, a valuable source of information once the buyer has been given the seller’s disclosure statement. If you're the buyer, be sure to read the disclosures carefully for clues about what to ask the broker more questions about. After all, your inquiry may bring to light an issue that the broker did not know was there, and the broker can then give you direction on how to more fully investigate the issue and make sure it can be fixed.
In one well-known court case illustrating the seriousness of broker disclosure duties, a seller asked the listing broker whether he should disclose an issue relating to prior flooding on the property, even though the problem had since been fixed in a way that would make future flooding unlikely. The broker advised the seller not to disclose the issue, and the buyers bought the home. The buyers later learned about the flooding on their property and obtained a legal judgment against the broker based on the fact that the broker told the seller not to disclose the flooding. (See, Svendsen v. Stock, 143 Wn.2d 546.) Had the broker properly instructed the seller to disclose the prior flooding as required, the entire case could have been avoided.
For more information on broker duties in the state of Washington, consult a lawyer or a local real estate professional.