Gotcha Guide™: The Truth about Texas Non-Disclosure Laws

NOTE: This article is part of the forthcoming book, the Gotcha Guide™ to Buying or Investing in Real Estate. by DeeinAustin™

Imagine this scenario. You just moved into your new home at 123 Main Street a few days ago. The garage is filled with boxes, you haven't yet found the nearest post office, and all of your new neighbors still look suspicious.

You go to the mailbox to find an over-sized postcard in your mailbox. It's from your buyer's agent. They sent it to the entire neighborhood. The postcard reads, "I just SOLD 123 Main Street for $354,500!"

GASP. All of your neighbors now know exactly how much you paid for your home!

But they can't do that! Texas is a non-disclosure state, right?

The short answer: YES! Texas is a non-disclosure state. BUT: According to the National Association of REALTORS®, being a non-disclosure state does not preclude anyone from publishing sold information. It means we are not REQUIRED to put sold information in public records.

WHY NATIONAL ASSOCIATION OF REALTORS® (NAR) STEPPED IN TO CLARIFY TEXAS NON-DISCLOSURE

A few years ago, many Texas REALTOR® Associations revised their rules to forbid the publishing of "specific home prices and addresses". The boards felt there was liability. Agents were allowed to advertise selling a home, but prohibited publishing actual sales prices. 

The National Association of REALTORS® (NAR)had a problem with this after a recent, routine review of our bylaws.

According to my Grievance Committee training this week, NAR® thought real estate associations do not have authority to govern marketing practices unless they specifically defy a state law. The publication of sales data in Texas is not illegal, so is out of scope.

WHY OH, WHY WOULD MY AGENT PUBLISH MY SALES PRICE?

Let's be clear. A good agent probably won't tell everyone how much you paid for a home. Generally, sales prices are useful in neighborhood newsletters. With the upcoming rules change, a Texas neighborhood specialist will mask the property address, but provide more detail. 

For Example:

Home #1, 3/2/2. 1900sqft. SOLD for $325,995 at 92% of List.
Home #2, 4/3/2. 3200sqft. SOLD for $485,000 at 87% of List.
Home #3, 3/2/1. 2300sqft. SOLD for $334,800 at 96% of List.

Wouldn't regular detailed sales information for your neighborhood be useful, all without having to contact an agent directly? All bets point to Yes.

All Rights Reserved, Copyright 2008 © Dee Copeland. Photo Credit: Realasponse.com

Comments

[anonymous]

This explains how the county can know how much you paid for your home even though disclosure is not required or explicitly collected by the state/county. The local MLS can disclose the information without many buyers/sellers noticing since there is no notice required/given. Thanks local MLS associations!

-Anon

[Dee Copeland]

Hi! Thanks for commenting.

I think Texas appraisal districts often get access to MLS to see the value of the home. We really thought we were protected if you purchase a home cash or off MLS, but that isn't necessarily the case.

Either way, the whole non-disclosure thing makes Zillow really incorrect in some areas because homes are more often sold off MLS or with cash. Another instance where I've seen Zillow wrong is when it's a growing area and it's still using Tax records.

In East and Central Austin, tax records could be 2-3 years behind the true value. This is especially the case when you have rapid appreciation because Homesteaded properties are capped at 10% change in Tax value.