12 Seller Disclosure Red Flags That Could Cost You Thousands

When a seller marks "unknown" on nearly every question — especially for basic things like "Are you aware of any roof leaks?" — it's often a deliberate strategy to avoid liability.

Think about it: If you've lived in a house for 5+ years, you know whether the roof leaks. You know if the basement floods. Claiming ignorance about obvious things suggests the seller is either lying or wasn't paying attention to serious problems.

The disclosure mentions recent work — a new bathroom, finished basement, electrical upgrades — but when you check with the city, there are no permits on file.

Unpermitted work is a ticking time bomb. It may not meet code. It could affect your insurance. And when you eventually sell, it becomes YOUR problem to disclose.

While "as-is" sales are sometimes legitimate (estate sales, bank-owned properties), this phrase in a normal sale often signals the seller knows there are problems they don't want to deal with.

Important: Even in an as-is sale, sellers are still legally required to disclose known defects in most states. "As-is" means they won't fix anything — not that they can hide problems.

Phrases like "there was water intrusion that was repaired" or "previous leak was fixed" sound reassuring. But water damage is rarely a one-time event. If water got in once, it can get in again.

More importantly: Was the root cause fixed, or just the visible damage? Patching drywall doesn't fix a drainage problem.

When sellers describe foundation cracks as "cosmetic" or mention they've been "monitored," it often means there's a real issue they're downplaying.

Cosmetic cracks exist, but that diagnosis should come from a structural engineer — not a seller trying to minimize concerns.

If the sellers owned the home for less than 2 years, ask why they're selling. Sometimes it's legitimate (job relocation, family changes). But sometimes people sell quickly because they discovered problems after buying.

Look at the price they paid vs. what they're asking. If they're selling at a loss or barely breaking even, something might be wrong.

If the disclosure mentions past insurance claims — especially for water, fire, or mold — the property has a CLUE report (Comprehensive Loss Underwriting Exchange) that future insurers will see.

Multiple claims can make the home difficult or expensive to insure, which affects your costs and resale value.

Any mention of "boundary disagreements," "neighbor issues," or "pending resolution" should raise alarm bells. These problems don't disappear when ownership changes — they become your problems.

Boundary disputes can be incredibly expensive to resolve legally, and difficult neighbor relationships affect your daily life.

If the disclosure is vague about HOA finances, pending assessments, or planned improvements, dig deeper. Special assessments can hit you with unexpected bills of $10,000-$50,000+ for things like roof replacements or structural repairs.

Statements like "property is in a flood zone but has never flooded" or "radon test showed elevated levels but well within safe range" attempt to disclose while simultaneously dismissing.

If it's disclosed, it's disclosed for a reason. Don't let the seller's interpretation override your own due diligence.

The disclosure says "no water intrusion" but you notice staining on the basement walls. It says "roof in good condition" but you can see missing shingles from the street. These contradictions are serious.

Either the seller is lying, or they're genuinely unaware of obvious problems (which raises its own concerns).

A disclosure that claims absolutely nothing is wrong — no defects, no repairs, no issues of any kind — is suspicious, especially for an older home.

Every home has something. A 30-year-old house with "no known defects" either has an extremely meticulous owner or one who isn't being forthcoming.