Disclosure is a constant consideration for real estate investors because so many of the properties we deal with have significant shortcomings. Evaluate every wholesale prospect and every rehab plan while remembering what must be disclosed if it isn’t cured before the property is listed for retail sale to homebuyers – or even to other real estate investors.

So how can disclosure work to your advantage? How can it help you negotiate a better purchase price – and how can it help you actually build confidence in your eventual retail homebuyer?

You should be thoroughly familiar with the disclosure laws in your state. If you are in doubt about a fuzzy issue, your standard assumption should be “disclose”. Before you rely on anyone’s word about the need to disclose an issue, double-check the law as it is written, no matter how expert the opinion. Some people give advice based on their assumptions rather than their knowledge.

My personal ethics are to disclose more, rather than less. I want the homebuyer or the investor to know what they are getting. Of course, for the homebuyer, what that really means is that I intend to fix it before I sell it. And THAT means factoring in the cost of all the big fixes BEFORE I ever buy this property to rehab (or wholesale), and keeping my purchase price under control!

Before you purchase a property to wholesale or to fix & flip, sit down with the seller and go over every condition requiring rehab money to bring the property to top sales condition. As I’ve said before, I am up-front with sellers that I do this for a living and I make a profit.

The key to this meeting is to be sure the seller understands that they are also required by law to disclose these defects to other buyers who look at their home. They can sell for cash now, to you; or they can fix the defects themselves; or they can deal with negotiating these defects with other buyers. You are helping them toward the easy-button, the get-on-with-your-life decision – sell to you for cash, now!

On the other side of the project, when you are negotiating the post-rehab sale to the homebuyer, a thorough disclosure can actually increase a homebuyer’s confidence that they have the full story. And, noting the defects that you have repaired can also help them decide this property is a good buy.

Let disclosure be a useful tool, not a burden, for managing successful projects. I strongly counsel you never to avoid disclosure in your own sales. Instead, use disclosure wisely to keep your purchase price low, and at the end of the project, to increase your buyer’s confidence.

What’s the most difficult problem you had to disclose when you sold a property?

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