Disclosing Information That May Affect The Sale of a House

Hello ,

If you were approached by a potential buyer for a property in your neighbourhood and they asked you for your opinion on whether it was a good buy, would you tell them the truth?

What if you knew that the property would soon be affected by the removal of the railway crossing which is only a 100metre away and that there will be disruptions to trains, road closures, and an increase in traffic in the local area? Current traffic is already a nightmare during peak hour on that street and its going to be worse.

What if there were talks that the nearby residents ( including the new owners of the property for sale) could be relocated temporarily because of the noise and light disturbance which will be 24/7 for weeks? Would you tell them?

I'm conflicted: on one hand, I don't want to get involved , would rather mind my own business ; on the other hand, they are a young family who are going to end up overpaying for a property that is going to be unliveable for at least a year :( Should I say something?


Edited 9/03: Thanks ozbargain for letting me use you as a sounding board once more. Much appreciated :) After reading your replies ( but mostly after reading my own replies to your ones) , I've decided to do what IMHO is the right thing to do and warn the music teacher.

Turns out, that while I was in the midst of an ethical dilemma, my mrs has gone and told the potential buyer about the crossing removal project and that it would indeed be an inconvenience but has also stressed how ideally situated the place is ( walking distance to school, park, beach and train station). He was grateful and said he might still make an offer.

If he doesn't , I might get the seller or his RE to post the address on here since so many of you thought the construction work was more a plus than anything else. Who knows? He might be able to find a taker for his property on ozbargain :)

Comments

  • +94

    Yes

    • What if the current owners are acquaintances?

      • +12

        Then that's your decision to make on how close you are to the current owners, and where your moral compass is at.

      • +35

        I wouldnt tell if it was a good buy etc. what I would do is tell them what you know. Just keep to the facts. Let them decide if that’s something that makes it a good buy or not.

      • +20

        Don't be a dog. Be honest.

      • +13

        Think about the equation of total happiness.

        1. The current owners: If you tell, they may not be able to sell right now, and if they do they'll lose a little money. But, they may find a new buyer who doesn't think of canvassing the neighbours for information and get the same price, but will take longer to sell.

        2. The potential owners: If you don't tell, they will be stuck somewhere they can't live in, not be able to afford to buy elsewhere, and possibly have a miserable couple of years in front of them.

        The harm to the potential owners of not telling is much larger than the harm on the current owners for telling. Therefore the right thing to do is to tell.

      • Sounds like the potential new owners will be acquaintances too…

    • -14

      No. Especially if OP owns their own home - not a good idea to depress property prices around you.

      • +14

        Except that you'll have a neighbour next to you who is pissed off at you lying. I'd rather my house be worth a little less and have pleasant happy neighbours than ones that may want to make your life hell for years.

        • -1

          OP is over a km away. And I didn't tell OP to lie - what is with you and these false dichotomies? OP can say "sorry, I don't really want to give advice on real property since I'm not an expert in any way".

          • +4

            @HighAndDry: Oh yeah I just saw that. Weird that he is asking someone who doesn't live anywhere near by. Why would he know anything about whether it is a good buy?

            If they're a km away, it wouldn't have that much affect on the price of OPs would it? I still think it is the moral thing to do to say what you know. And if the OP knows them personally there's even more incentive to be honest.

            • @Quantumcat:

              And if the OP knows them personally there's even more incentive to be honest.

              This I agree with.

              I still think it is the moral thing to do to say what you know.

              This is probably something we'll disagree on haha. I don't think there's this kind of obligation at all - don't lie, but I think it's morally perfectly fine to say "Look, this is a huge decision for you and I really don't want to swing you one way or the other when I'm not an expert".

              • +6

                @HighAndDry: no wonder you defend the banks :). Its every man for himself in your books?

                • -1

                  @lonewolf: I defend the concept of being self-sufficient and having clearly delineated obligations. OP doesn't have a horse in this race and doesn't stand to benefit in any way - so OP doesn't have any obligations either way. Quoting p1 ama below:

                  it's public information, the buyer should have done their homework

                  • +10

                    @HighAndDry: The buyer is doing their homework by asking people with local knowledge ;)

                    • -4

                      @abb: True, but that'd be like doing actual homework by asking your classmates. It's an option, but uh, probably not the best one haha.

                      Plus - I'm not saying OP should lie - but OP doesn't have an obligation to help the buyer either.

                      • +1

                        @HighAndDry: I mean, if the homework was about life in Germany and you had a German exchange student, you'd be silly not to ask, wouldn't you?
                        Hopefully the buyer has asked other residents than OP, and/or their conveyancer will discover this. I've tried to look up planned works before and it's not as easy as it should be. I don't think in this case it would materially affect the sale anyway. "Oh no, the road will be improved, how horrible"

                        • -1

                          @abb: Agreed on basically all points, yeah. The buyer should definitely ask OP - but if you were doing homework on Germany, I'd hope your footnotes had more than "1 conversation with ______ ". Planned works should be fairly easy if you didn't limit yourself to online searches - quick over-the-counter chat with Council is generally all that'd be needed.

                        • @abb:

                          Oh no, the road will be improved, how horrible

                          But it will take 3 years to improve it and residents have been told that things will get much worse before they get better , which is why the current owner is so keen to move out.

                          To put things in context , the current situation is "the boom gates are down for an average of 42 minutes between 7:00am to 9:00am" weekdays. 42 minutes !!! and its about to get much,much worse…

                          • @DisabledUser102420: I don't know the situation obviously, but 42 out of 120 is about 1/3rd. So pretty comparable to a traffic light being red 1/3rd of the time, not that big of a deal. The construction noise etc will of course be disturbing, but it sounds like maybe they'll get alternate accommodation paid for? Some people can't stand that, some people don't mind.

                          • @DisabledUser102420: Dude, just say you don't know.

                    • +1

                      @abb: Correct. Tell them the truth. They then have a choice. Negotiate the price down based on facts, or not buy at all.

                      The reality is you and all your neighbours know exactly what is coming. That is exactly why this other neighbour is selling. They don't want to live through the problems. There is a cost for that which anyone who sells will suffer if they sell now.

                      Besides, if the potential buyers are asking lots of people, they can tell which neighbours are honest and who isn't. And they will be your neighbours.

                      Besides. The construction work will be finished at some point.

    • +1

      All of this information should be discovered when the buyer's solicitor applies to the relevant authorities for information. It is fairly standard practice in NSW and Victoria for the seller's solicitor to prepare a Section 32. If this information is NOT put forward at the time of sale then there may be a court case. So the best thing to say is "I know nothing".

  • +8

    Yes, tell them.

  • +5

    Don't understand the harm of telling the truth and telling them your opinion.

    • The sellers are acquaintances and they are keen to sell because they have already bought another place. They will be affected by my disclosure.

      • +11

        Acquaintances or not, are you really happy with them ripping off a young family buying a house in good faith? If you're selling something you naturally want the best price, but if you're a decent person you're always going to tell the truth of the matter too.

        It's really your decision should you choose not to 'interfere', but by saying nothing you really are helping your neighbors swindle this family. You're not letting out a secret by telling them, you're giving them information that they really should have known before buying.

      • Meh if there only acquaintances id say go for it.
        They are moving out anyway soon from the sounds of things.

      • +1

        I would tell the truth, and state the facts. Tell them about the railway crossing. If you were buying, you'd want to know too.

        But if you do not want to do so, you could perhaps just advise that you know the sellers and do not wish to influence their decision.

        This way you are being entirely honest, and you are being transparent about the conflict of interest. If you want to take it a step further, but not all the way, you could recommend they do some research into the area.

        Edit: Looks like you have at least some sort of loose relationship with the buyer. They approached you in good faith. You at the very least owe them an honest answer imo.

    • +18

      You're going to give a stranger leverage for negotiating a better price which will be the to the direct detriment of your current neighbour and indirectly affect all the property prices of all your neighbours.

      What's wrong with, "I do not wish to interfere with a neighbour's sale. It is a courtesy I will extend to you should you be my neighbour in the future".

      • +11

        "Oh, so there's something bad happening. Hmm… will check that out…"

      • Agree with your approach, may couched slightly differently…

        that you are friends with your neighbours and it’s not appropriate for you to advise on what maybe only your opinion on the value of the sale.

        It is in effect a value decision. A house for example with termites is still a good deal if it’s cheaper by the cost of the repairs time of delay etc… so that’s why it’s not appropriate to advise - it’s giving financial advice.

        However reading further down, it is now obvious the OP has a relationship connection with the buyer, so the above while perfect for strangers is completely different.

        • and also your property value
        • My property value will not be affected either way. I used to live about 1km away but I sold my house . I now live a couple of suburbs away.

          • @DisabledUser102420: The right action should be obvious then

            • @Quantumcat: And what would that be?

              • +1

                @DisabledUser102420: Tell them - It doesn't impact you negatively at all, it helps someone enormously, and it could impact you negatively if you don't (as the potential buyer is your sons teacher). There's no upside to not telling them.

                • @Quantumcat: No - telling them risks OP being blamed if he's wrong in anything he tells them, or even in any impression or implication they draw from what OP tells them. It negatively also impacts OP in that they're now seen as being nosy, and the seller is obviously not going to like OP much if they find out.

                  Plus - if it decreases house prices, it indirectly decreases the value of OP's own property which, even if 1km away, is still in the general area.

  • +1

    Ask them their opinion of a "good buy" and figure out whether the house still fits into that category, even with the upcoming disruptions. Would a young family want to be so close to a busy intersection regardless of whether there is a train crossing or not.

    If you can, find out why your friends are selling at such a critical time and whether they are expecting to get full market value in the circumstances.

    I'd be honest as possible but only once you know the full circumstances on all sides and know how to be honest and use discretion at the same time.

    • +2

      It's only a busy intersection at the moment because the boom gates are down for an average of 42 minutes between 7:00am to 9:00am and another 42 minutes between 4.30 p.m to 6.00 p.m weekdays. Removing the railway crossing will solved that problem.

      The house is ideally situated as it is within walking distance to beach, kinder , a primary school and park. It is also only one train stop away from a secondary school.

      But is it a good buy at the advertised price? No way! Not in the current market and not knowing about the crossing removal works which will be starting soon .

      The sellers have already bought another property and are keen to off-load this one.

      • But is it a good buy at the advertised price? No way!

        Did I oversleep and we have introduced property RRP?

        The sellers have already bought another property and are keen to off-load this one.

        Just how much do you hate these people?

        • +1

          Not so much RRP as " current indicative price."

          I don't hate them at all. I thought they were quite nice actually .But I do have a closer relationship with the buyer ( my son's music teacher) than them.

  • +2

    You should tell every protenial buyer until the owner not selling their property.

  • +6

    whether it was a good buy, would you tell them the truth?

    Good buy - opinion

    Truth - fact

    What if you knew that the property would soon be affected by the removal of the railway crossing which is only a 100metre away

    Where is this what they're doing something to make traffic worse?! This hypothetical is more hypothetical than some other hypotheticals.

    What if there were talks that the nearby residents

    Rumours are not facts.

    I'm conflicted: on one hand, I don't want to get involved , would rather mind my own business

    You're the nosiest person I can think off… Period

    • +1

      Where is this what they're doing something to make traffic worse?

      Not hypothetical . I've attended the community meetings as I used to own a property close by.The disruptions have been confirmed by the authorities.

      Re: rumours are not facts . Are facts , facts?

      Here's an extract from one of the pamphlets we were given :

      All residents and businesses affected will be notified in advance of construction commencing. Nearby residents may be relocated for the duration of the unavoidable night-time construction period.

      Not nosy at all. Just a slight case of OCD . My current obsession is property market.

      • Not hypothetical . I've attended the community meetings as I used to own a property close by.The disruptions have been confirmed by the authorities.

        So it is a crossing removal for an upgrade?

        That's public domain. Someone not doing their due diligence is their problem.

        Extract from one of the pamphlets we were given :

        That's public domain. Someone not doing their due diligence is their problem.

        Not nosy at all. Just a slight case of OCD . My current obsession is property market.

        So study the market. Make predictions. Go for open houses/auctions.

        Don't take a proverbial dump on your neighbours prospects. That is not being interested in real estate. That's being nosy.

        • So study the market. Make predictions. Go for open houses/auctions.

          I have. I've sold a house , bought another one and helped a mate find his dream home at a bargain price. All within the past month.

          I was asked for my opinion because the potential buyer knows that I used to live in that area. I'm not nosy. In fact, I've often been called absent-minded by my neigbours, students, wife…etc :)

        • +2

          That's public domain. Someone not doing their due diligence is their problem.

          Where would you get this information from? I'm not aware of a website where you can search for recent roadworks letter box drops, but maybe (hopefully!) there is one.

          Asking the locals is a very common way to find such info…

          • @abb: Ask local council. They can even tell you when the next time NBN people are going to dig up your front lawn.

            • +3

              @tshow: With my mouth words? It's 2019 dammit!

              • +1

                @abb: The mouth words is how you get the question answers so you have the brain knows.

  • +4

    The owner should be doing their own research in your example

    • +5

      I believe asking me and other parents at pick-up time was part of doing their research.

      • Won't someone else mention what you've brought up here?

      • +1

        ….so if he finds out that you lied…or failed to provide the details he requested as part of his research…..he'll want to take revenge on you in future in whatever form or shape……..or well I would if I was the buyer, asked around for some information as per my research only to be lied to, and then when we actually move in, the opposite is true and thus I would have this grudge(albeit maybe personal too…) at the person or people who lied to me and create a revenge plan…………………….or at least keep that in mind if they ever need anything from me, I could just flog them off too or lie back……

        • What's wrong with you lol. No one is telling OP to lie - just not give anything other than what they know concretely to be fact (which is not a lot).

  • +3

    A railway level crossing removal is a big deal and prospective buyers would have easy access to this information online - buyer beware

    • +11

      If they're removing the crossing with temporary disruption and making a significant infrastructure upgrade like over/underpass, that is a big plus.

      • +1

        Not if the project is expected to commence in 2019 and be completed by 2022. It will be a big plus in 2022 at completion but not a big plus while the work are in progress.

        • +1

          So it's going to go up but your neighbour isn't allowed to make a profit earlier?

          • @tshow: Btw, the seller is not my neighbour , just an acquaintance. My property was about 1km away.

            I'm only involved because I was asked for my opinion which I've so farrefused to give because I don't want to get involved . However , the potential buyer is my kid's music teacher. So, he is someone I will be involved with for the next couple of years.

            • +1

              @DisabledUser102420: Ha, ha. Tell him.

            • +4

              @DisabledUser102420: They are both acquaintances.

              Look, manners and etiquette aside, which is a serious problem but you're not convinced so let's be pragmatic.

              You say it's a bad buy:

              to buyer - if the prices go up and/or the property this person buys is worse, you'll be remembered as someone who gives bad advise and is nosy.

              to seller - if they found out, you're the meddling Ahole. If you said something that's considered factually untrue and damaged their sale price, you're a slandering Ahole.

              The same is true if you said good things about the place.

              Either way, it's one of those things that you do not get involved unless you're very close to the buyer.

              • @tshow: Not close to the buyer but he is really good with/ to my son who is a naturally gifted musician but prefers to daydream rather than practice. He inspires him to be better. Good music teachers are hard to come by and we're planning to hold on to him for as long as we can.
                I don't want our relationship to sour because I didn't warn him about the potential pitfalls of buying that property :(

                • +1

                  @DisabledUser102420: This potential buyer has turned from hypotheticsl stranger to musical savant and an inspiration to children.

                  It seems the answer that we're working to is that this is a family friend and a saint in which case divulge all known rumours and play real estate guru.

                  • @tshow:

                    This potential buyer has turned from hypotheticsl stranger to musical savant and an inspiration to children.

                    I was asked not to post this on ozbargain , " but if you must, for goodness sake please be discrete and don't give out any identifying details." Oops!

                    • @DisabledUser102420: Not to post that a music teacher to an anonymous internet user is buying property.

                      • @tshow: I was quoting my wife :) She knows me far too well and I'm in part responsible for her disabling her ozbargain account.

                        I've given so many identifying details in this post that some clever ( and cheeky) ozbargainer has just emailed me the link to the property.

                        Edit: Looks like there's an open house this weekend. SO maybe music teacher has not made an offer or is having second thoughts.

                        Edit #2: or he's an ozbargainer and has read this post :)

                        Edit # 3: If he is , I've just revealed my secret identity :(

                        • +1

                          @DisabledUser102420: If he has, he knows you consider him a god.

                          • @tshow: Not a god by any means, more someone I pay to do my bidding and does it remarkably well. One could say, he's the Robin to my Batman :)

            • @DisabledUser102420: So what did you say? I refuse to give you my opinion?

        • +5

          I don't know if I've missed something, but I don't know why this is such a big issue. I'd just say it in a neutral way, e.g. "oh yeah, I don't know too much about the property, but there's a railway crossing nearby that they're removing this year. The project's not done until 2022, but the traffic will flow heaps better when it's done" or something to that effect.

          You're covering both your bases - you're being good to the potential buyer by highlighting that there is construction until 2022, but you are also being good to the seller by pointing out that the crossing being removed is a great thing. Basically my point is, it's public information, the buyer should have done their homework, so I'd be surprised if they didn't already know. I don't really see it as much of a moral problem, it's not like some secret insider info.

          • +2

            @p1 ama: It’s an issue, because the op keeps changing the goal posts. Keeps dribbling out the details every time to in effect try to get opinions that justify the actions that frankly they seem to have taken already.

            Eg never told in first place they know the buyer. Which takes away the emotional neutrality aspect. Then they indicate, that they were in the past a neighbour - having sold etc

            • @RockyRaccoon: We never were neighbours. I used to live about 1km from them before I sold my place. We met at community meetings that were organised in protest of the railway crossing project.

          • @p1 ama: Agree!

        • Is your son's music teacher not planning to hold the property for even 3 years? In most cases, this is a good thing for buyers. Temporary inconvenience for permanent capital gains. It's a no-brainer.

  • +2

    I suppose it depends on whether the information you have is available in the public domain. If it’s not public information, you probably shouldn’t disclose it lest you find yourself in strife; if it is, then it’s no different to the buyer doing some research.

    It’s like being a public servant during the caretaker period. Answer truthfully, but not the whole truth unless specifically asked.

  • If there is the potential to be relocated for a year, that might fall under a disclosure requirement for the seller. I wouldn't have a problem mentioning it.

    • Disclosure requirement is between the agent and the buyer.

      • Not all sales have an agent. :p

        • This one does.

          • +2

            @DisabledUser102420: In Vic:

            "The Section 32 is a document provided by the seller of real estate (vendor) to an intending purchaser. Its name comes from Section 32 of the Sale of Land Act, which requires a vendor to provide certain information to a purchaser BEFORE a contract of sale is signed."

            Given I prefaced it with 'it might', I don't think I'm wrong. Google Section 32.

  • +1

    if i were buyer I wouldn't mind the info, heck when buying a house 3 years is short-term, if you dont disclose it buyer might have to pay a bit overpriced which they will most likely do around this time anyway, but 5 years later down the track it just doesn't matter.

  • Only tell if they are willing to tip you some money.

  • +9

    I don't want to get involved

    Then don't?

  • +3

    the railway line info is stuff that the owner could find out themselves. In the long term (after the works have finished) wouldn't it increase the value of the house? Although I guess it depends on what exactly is happening with the rail crossing.

  • +1

    I think the key here is a balance of you telling them what you think and the potential buyer's own research.

    Perhaps just give them some pointers on what to research such as the upcoming rail crossing works and just the general market movements etc.

    I wouldn't be giving my opinions on whether house prices are going up or down or whats expensive/cheap or what the long term impact of the rail crossing works are going to be. Whether the price is worth it or not is up to the buyer to decide themselves since everyone values things differently.

    That way, the onus is on the buyer to do their own detailed research and your neighbour cant be angry at you for potentially sabotaging their sale.

    It wouldn't be fun to know you have someone in the neighbourhood who is pissed because you cost them tens of thousands (or even hundreds!) because you expressed your opinions. It'll be much worse if those opinions ended up being wrong.

  • +7

    You: oh yeah I heard they're getting rid of that damn rail crossing which should be good!
    Them: oh that is good but I guess there will be roadworks then
    You: oh I'm really not sure

    Simple.

    The problem with this thread, is that surely the question has been posed to you already? On the spot? What did you say, "let me get back to you on my opinion" then ran away?

    • Spot on 🙂

    • +4

      Just gotta check with Ozbargain first :D

    • I've said, "I'm not the right person to ask. I wouldn't know." To which, he said "You used to live in that area,didn't you? If you remember anything pertinent, could you please let me know? This is going to be our first big purchase and we're understandably nervous." or something to that effect :(

      At which point, my eldest saw me and ran over, all excited, to give me a hug and play his rendition of shotgun - by George Ezra

      • +2

        Ha! Look - I personally think you've had the conversation, and you can just do nothing. But if you're not comfortable doing that, which from your responses you're not, then a reasonable middle ground to me would be Spackbace's idea above:

        "Oh yeah I remember there being talks of getting rid of the crossing, don't know if there's been any final decisions made on that though."

        Done - then they can do their own research.

        Also - be honest, are you just hoping they'll stumble on this thread and save you the dilemma of having to decide what to do one way or the other?

        • +4

          Yes I am.

  • +2

    Everything that the buyers need to know is in the contract. Anything not in there is their responsibility to find out.

  • Isn't all that covered by the search? Anyway removal of a crossing is far easier than installing one so any works shouldn't be too bad plus it will improve the outlook for that property.

  • If the buyers want a professional opinion as to value then they should pay for a valuation by a property valuer.
    Nothing wrong telling them the facts about what is happening in the area, however it is just your opinion as to what affect that may have on value. I would let them make up their own mind after doing their research.

  • +1

    Yeah all of that info is available to their conveyancer. They would be more interested in knowing if there are any bikies or pikies living nearby.

  • +1

    Wouldn't you like to know if the roles were reversed?

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