Most homeowners understand the basic idea behind disclosure when selling a home: if there is an ongoing issue with the property that could affect a buyer’s decision, hiding it is a bad strategy.

But there is another side to disclosure that sellers sometimes miss.

Handled properly, disclosure isn’t only about managing risk. It can strengthen a seller’s negotiating position.

An issue or item discovered by a buyer after an accepted conditional offer can become a reason to renegotiate, ask for repairs or walk away from the transaction.

An issue disclosed before the buyer writes the offer is different.

The buyer knows what they’re considering. They can account for it when deciding whether to make an offer and what that offer should look like.

For Luke O’Reilly of The O’Reilly Group, that distinction is central to how he advises sellers in Hamilton, Ancaster, Dundas and Burlington.

“If there’s an ongoing problem or ‘defect’ with your home that would affect somebody’s decision to buy, do the right thing and disclose it,” O’Reilly says. “Then come up with an appropriate strategy with the Realtor you’ve hired to guide you through that process.”

The objective isn’t to alarm prospective buyers or create a list of every repair made during decades of homeownership.

It’s to identify material, ongoing concerns, communicate them appropriately and remove unnecessary surprises from the transaction.

What Should a Seller Disclose When Selling a Home?

As part of O’Reilly‘s listing process, sellers complete a multi-page questionnaire about the property before it reaches the market.

The questions are designed to identify property characteristics and known issues that may require further discussion.

O’Reilly and his team review the answers and, when something stands out, discuss it with the seller.

“Based on the way our sellers answer those questions, we review everything on our end,” O’Reilly says. “If we feel certain items need to be disclosed, we come up with appropriate wording.”

Examples that may warrant further discussion can include known ongoing issues involving:

• Knob-and-tube wiring
• Aluminum wiring
• Kitec plumbing
• Asbestos
• Basement moisture or other recurring moisture problems
• Floodplain considerations
• Lead water service lines
• Other known property conditions that could materially affect a buyer’s decision

The appropriate disclosure will depend on the circumstances of the individual property.

For sellers who are unsure about a particular issue, O’Reilly recommends discussing it with their Realtor rather than making assumptions.

“If a seller tells me they’re unsure, we can strategize on it together,” he says. “They can ask me questions and I can provide my opinion. If they’re still uncomfortable and want a third-party opinion, they can always run it by the real estate lawyer they’re planning to work with.”

Why Disclosing Before the Offer Can Help a Seller

Consider a home with known knob-and-tube wiring.

If the seller knows it exists but a prospective buyer isn’t told, the issue may surface during a home inspection.

Now the conversation has changed.

The buyer has already negotiated a price and entered into a conditional agreement. After discovering the wiring, they may ask for a price reduction, request that work be completed or reconsider whether they want to proceed.

O’Reilly would rather move that conversation forward.

“If we know the home has knob-and-tube wiring, let’s make the disclosure upfront,” he says. “Then the buyer is making their decision knowing that information.”

That doesn’t guarantee a buyer won’t factor the issue into their offer price.

They probably should.

But it gives the listing side a reasonable negotiating position as well.

The seller can explain that the known characteristics of the property were considered when establishing the asking price.

In other words:

The buyer isn’t discovering a new problem after negotiating the deal. They’re negotiating with the information already available.

Disclosure Can Reduce Post-Inspection Renegotiation

A home inspection condition can create a second round of negotiations.

A buyer may enter into an agreement at one price, inspect the property and then identify issues they believe justify changing the deal.

Sometimes those concerns are legitimate new discoveries.

Other times, they involve characteristics the seller already knew about and could have disclosed earlier.

O’Reilly regularly sees buyers attempt to renegotiate after inspections uncover concerns.

“Buyers are often looking for different ways to renegotiate the price down after a home inspection,” he says. “If you’ve made the disclosure upfront, you’ve already put that information on the table.”

That doesn’t eliminate every inspection-related discussion.

Nor does disclosure prevent a buyer from deciding an issue is more significant than expected.

What it does is reduce the likelihood that a known issue suddenly appears halfway through the transaction as entirely new information.

That can put the seller in a much clearer position.

The Kitec Plumbing Example: Why Information and Context Matter

Kitec plumbing provides a useful example of O’Reilly‘s disclosure philosophy.

The plumbing system was installed in many homes during a particular period, and its presence can create concerns for prospective buyers, including questions relating to future failure risk and insurability.

When O’Reilly knows Kitec is present – or identifies it while preparing a property for sale – he prefers to address the issue before a buyer discovers it independently.

That can mean more than simply stating that Kitec exists.

The seller may obtain a quote from a licensed plumber so prospective buyers can better understand the potential cost of replacement.

“If the seller is aware of Kitec plumbing, we’ll often disclose it and get a quote from a licensed plumber so that we can provide that information to the buyer upfront,” O’Reilly says.

That additional information changes the nature of the conversation.

Instead of:

There’s Kitec plumbing. Good luck figuring out what that means.

The buyer receives:

There’s Kitec plumbing. Here is information about it, and here is a professional quote that can help you assess the cost.

The issue hasn’t disappeared.

The uncertainty surrounding it has been reduced.

And uncertainty is often what makes buyers nervous.

Sometimes Losing a Buyer Early Is Better Than Losing a Deal Later

This is where disclosure becomes a listing strategy rather than simply a paperwork exercise.

Imagine a home has been listed for two weeks.

A buyer submits an offer conditional on financing and inspection. The seller accepts.

The property’s listing status changes.

For the next several business days, the transaction is conditional.

Then the home inspection takes place.

The buyer discovers Kitec plumbing, decides they’re uncomfortable with it and walks away from the transaction.

The property returns to the market.

Now other prospective buyers may notice that the home appeared to sell conditionally and then became available again.

That can create questions.

What happened?

Did the inspection uncover something serious?

Why did the deal fall apart?

Is there a problem with the house?

O’Reilly would rather avoid creating those questions unnecessarily.

“If making the disclosure upfront scares a buyer off and they decide not to make an offer, I’d rather have that,” he says. “I’d rather know before they tie the property up conditionally and then discover it and back out.”

That leads to a useful principle for sellers:

It can be better to lose the wrong buyer before an offer than lose a conditional sale after the property has been tied up.

Protecting the Momentum of a Listing

A failed conditional sale doesn’t necessarily mean there is something seriously wrong with a property.

Deals fail for many reasons.

But perception matters when selling a home.

If prospective buyers or their agents see a property change from active to conditionally sold and then back to active, they may naturally ask why.

That is particularly relevant now that consumers have greater access to listing history through real estate websites, apps and their agents.

A seller doesn’t necessarily control what conclusions someone will draw from that history.

This is why O’Reilly sees early disclosure as one way to protect the momentum and positioning of a listing.

The goal is to have buyers assess known issues before they enter into an agreement whenever reasonably possible.

A buyer who remains interested after reviewing the information may be a better candidate for a successful transaction than someone who discovers the same issue several days after an offer has been accepted.

Does Disclosure Mean Telling Buyers About Every Problem the House Has Ever Had?

No.

This is where O’Reilly believes sellers need to distinguish between an ongoing problem and the normal repair history of a home.

Homes require maintenance.

Things break.

Leaks happen.

Components wear out.

Repairs are made.

A property that has existed for decades will inevitably have a history.

O’Reilly doesn’t believe that means sellers should create a catalogue of every problem that has ever occurred.

Consider a skylight that leaked five years ago.

The homeowner hired a professional to repair it. Since then, the property has experienced years of rain without another leak.

In O’Reilly‘s view, that’s very different from a skylight that has been repaired several times but continues to leak.

“During the course of homeownership, issues come up,” he says. “If a skylight leaked, it was professionally repaired and it hasn’t leaked again despite serious rain since then, that’s different from an ongoing problem.”

The distinction is whether the issue still exists.

Explore more helpful related articles from the blog:

• Common Home Inspection Issues Sellers Face – And How to Get Ahead of Them Before Listing
• Ultimate Guide for First-Time Home Buyer’s in Hamilton, Ancaster, Dundas & Surrounding Areas
• What Buyer’s Need To Know About Buying Rural Properties Near Hamilton

What Is an Ongoing Property Issue?

A useful question for a seller is:

Does this problem keep coming back?

O’Reilly pays particular attention to repeated issues that have never been successfully resolved.

“If somebody is having a repeated issue that continues to pop up, or they’ve attempted to remedy it and they’re still experiencing the problem, I think that’s the distinction,” he says.

For example:

A single leak that was professionally repaired and hasn’t returned is one thing.

Recurring basement moisture after multiple attempted repairs is another.

Old wiring that has been completely removed and professionally replaced is different from old wiring that remains in the home.

A historical defect that has been properly remedied isn’t necessarily the same thing as an existing property concern.

When the answer isn’t clear, that’s when the seller should ask for advice.

How Do You Disclose a Problem Without Unnecessarily Scaring Buyers?

Words matter.

Being transparent doesn’t require being alarmist.

“There is a way to phrase it,” O’Reilly says. “You can do things above board while communicating the information in a non-alarmist way.”

A useful disclosure is factual.

It identifies the relevant issue without exaggerating or minimizing it.

Where additional documentation is available, providing it may help buyers understand what they’re considering.

That could include, depending on the circumstances:

• Professional quotations
• Relevant reports
• Documentation relating to work completed
• Information that helps explain the scope of the issue

The purpose isn’t to sell the buyer on why a problem doesn’t matter.

It’s to give them enough reliable information to evaluate it.

That builds credibility.

Can Disclosing a Property Issue Lower the Offer Price?

Potentially.

A buyer may account for a known defect when deciding what they’re willing to pay.

But O’Reilly points out that the seller can account for it too.

“If a buyer comes in at a lower price because they’re taking those items into consideration, as the listing representative I can argue that those factors were already taken into consideration with the current list price,” he says.

That creates a more informed negotiation.

Compare that with a buyer discovering an unknown issue after agreeing to the price.

In the second scenario, the buyer may reasonably argue that the information wasn’t part of their original calculation.

The seller is now negotiating from a more difficult position.

Disclosure doesn’t make the issue disappear.

It changes when the issue enters the negotiation.

And timing can matter.

Disclosure Builds Trust Between Buyers and Sellers

Real estate transactions involve two parties who don’t usually know one another making a significant financial agreement.

Trust is limited by default.

An organized, transparent approach to known property concerns can help.

A buyer who receives a disclosure before submitting an offer knows the seller isn’t waiting for an inspector to discover the issue.

When a seller provides supporting information or a professional quote, it can further demonstrate that the concern has been considered rather than hidden.

That doesn’t mean the buyer will like what they learn.

But there is a difference between receiving unwelcome information upfront and discovering it after committing to a transaction.

For O’Reilly, the first approach is usually better for everyone involved.

What Should You Do If You’re Not Sure Whether to Disclose Something?

Don’t guess.

Talk about it.

A seller who isn’t sure whether an issue should be disclosed should raise it with the Realtor representing them.

O’Reilly‘s listing questionnaire is designed partly to start those conversations before the home reaches the market.

From there, the circumstances can be reviewed and an appropriate strategy developed.

And when the issue raises a legal question beyond the Realtor’s role, the seller can consult their real estate lawyer.

That’s a far better approach than quietly deciding an issue probably isn’t worth mentioning and hoping it never comes up.

The Best Disclosure Strategy Is Usually the One With Fewer Surprises

There can be a natural temptation when selling a home to avoid drawing attention to anything that might make a buyer hesitate.

But avoiding an uncomfortable conversation before an offer can create a much more uncomfortable conversation afterward.

O’Reilly‘s preference is straightforward.

Identify known ongoing issues.

Get appropriate advice.

Provide useful context where possible.

Communicate the information clearly.

Then allow prospective buyers to make an informed decision.

“If there’s an ongoing issue with your home that would affect somebody’s decision to buy, just do the right thing and disclose it,” O’Reilly says.

Because a buyer who knows about an issue and still chooses to write an offer is telling the seller something valuable.

They’ve seen the problem – and they’re still interested in the property.

That’s often a much stronger place from which to negotiate.

We're On Your Side

Whether you’re selling or buying the O’Reilly Group is dedicated to elevating your real estate experience.

Book a Meeting