CHICAGO -- Coldwell Banker, one of the nation's three largest residential real estate firms, took a major step yesterday toward forcing home sellers to disclose defects that could affect the value of their property.
The company became the first major nationwide firm to require sellers to fill out a written disclosure form for all listings obtained by its company-owned offices across the country. Disclosure forms will also be required for homes purchased by buyers working through those Coldwell Banker offices.
Many real estate firms advise sellers to prepare written disclosures, but only a few actually refuse to take a listing unless one is filled out.
Coldwell Banker, a unit of Sears, Roebuck and Co., has nearly 1,900 residential real estate offices nationwide, some 30 percent of which are company-owned. Century 21, Coldwell Banker and Re/Max rank as the three biggest residential real estate companies nationwide.
Joyce Burke, president of Coldwell Banker Chicago, said she expects the majority of the company's independent franchisees will follow the policy, even though they are not required to as the company-owned offices are.
Mandatory seller disclosure became a hot issue last year when the National Association of Realtors began a campaign to get states to require it by law. So far, only Maine and California have such statutes. Much of the fervor for disclosure comes from the desire of real estate agents and their companies to insulate themselves from suits by buyers who believe they've been sold a lemon.
"It's something that shifts liability from the agent, who doesn't know, to the seller, who should know," said Albert Suguitan, Illinois real estate commissioner.
But Mr. Suguitan also pointed out that disclosure is good for the consumer. "A buyer should have the opportunity to know what kind of defects a home has," he said.
The disclosure statement to be used by Coldwell Banker is a two-page form that lists 14 categories ranging from land (soils, drainage and boundaries) to roof to electrical system to toxic substances, and asks whether the seller is aware of problems in those areas. Sellers aren't required to be experts, only to put down what they know about, Ms. Burke pointed out. "It might be a little intimidating at first, but in reality, the sales contract is more intimidating," she said.