Seller’s Disclosure vs. Home Inspection: What’s the Difference?

As you progress through the escrow closing process, you’ll soon find yourself facing a two-pronged inspection process on the side of the buyer and a third party professional. Once you place your initial deposit in escrow, the seller will present you with a disclosure statement (or seller’s disclosure). 

A disclosure statement is prepared by the seller of the house and should include any records of water damage, termite damage, mold, or anything related. It can also range from listing previous pets that have been on the property. The seller should list anything they’re aware of that may come back to bite them in the future. Otherwise, it may come up during the home inspection.

With a home inspection, professionals who know nothing about your home will go in and look at certain areas that may be of concern to the buyer, revealing defects in the home that even the seller wasn’t aware of.

As you can see, both steps of the closing process involve placing a magnifying glass to your home and delving into the details. But what makes each different? Let’s dive into the process of a home disclosure and home inspection, so you know exactly what to expect!


Home Disclosure vs. Home Inspection


Seller’s Home Disclosures

A seller disclosure statement is a form where the seller and real estate agent disclose any issues they are aware of that could negatively affect the value of the home. Signing this statement is part of the escrow process and offers legal protection for the buyer in which any flaws and issues are revealed before purchase.  

In California, sellers must provide a Transfer Disclosure Statement (TDS) to any potential buyer whose offer has been accepted. This form asks specific questions about defects or malfunctions the seller may be aware of. It asks about the condition of the roof, the electrical wiring, appliances, smoke detectors and other relevant features of the property.

The most important concept to keep in mind is that you must disclose any material facts that you are aware of, even if they are not specifically addressed by the standard forms.



A seller’s disclosure in California will likely cost around $125.


What Gets Disclosed?

The seller of the house is required to list any issues that may affect the buyer’s choice to purchase, especially in the case where repairs may cost high amounts of money.

Here are some very common real estate seller disclosures to be aware of, whether you’re on the buyer’s side or the seller’s side. You must also provide several supplemental disclosures (noting whether the house is in a flood zone, for example). When it comes to home disclosures, it is the seller’s job to collect every scrap of information they can find relating to the property in question.

Common issues that are usually disclosed by the seller include:

  • Death in the home
  • Neighborhood nuisances
  • Hazards
  • Homeowners’ association information
  • Repairs
  • Water damage
  • Missing items


Completing a Seller’s Home Disclosure

Before the home inspection, the seller presents all home disclosure documents to the buyer, and the buyer must sign the papers in question. If there is something that stands out as a red flag, it can become a contingency placed by the buyer to the seller in order to close the deal. This means the two parties can agree something must be fixed or replaced before going through with closing. 

Pro tip: It’s in buyer’s interest to not skim through the paperwork. All signatures are legally binding, meaning you are acknowledging any and all issues. Even though the process is lengthy and extensive, slow and steady wins in the long run. You don’t want any disclosure issues to arise!


Home Inspection

An inspection is conducted by an independent third party that specializes in home inspections. Inspections may take anywhere from 2-3 hours. The time is well-spent considering there are more than 500 components in the average home!


What Is Inspected?

These professionals normally check that all systems and parts of the house are functioning, from the basement to the roof. This includes:

  • Air conditioning
  • Heating
  • Interior Plumbing
  • Electrical Systems
  • Visible Insulation
  • Roof
  • Attic
  • Foundation
  • Structural components



The average cost of a home inspection in San Diego is $324, with a range of $274-$381 for most homes. On the low end, a small home may cost only $225 for an inspection. On the high end, you may pay as much as $450 or more to have a very large home inspected.


Completing a Home Inspection

A good home inspection report is extensive, containing checklists, summaries, photographs and notes. It may estimate the remaining useful life of major systems and equipment and will include recommended repairs and replacements.

Based on the outcome of inspections, buyers may elect to ask the seller for repair work, closing cost credits, or a reduction in the sale price due to flaws that were uncovered.

Sellers then have three options:

  1. Agree to all of the buyers’ requests
  2. Offer a modified solution back to the buyer
  3. Decline to make any amends

No fixes are mandatory after a home inspection, though it may uncover issues that prompt further negotiations. In response, the buyer can continue to negotiate, accept the seller’s position, or in some cases, end the transaction and recoup their earnest money.

Overall, home inspections and home disclosures are not pass-fail exams. They serve to make the potential buyer aware of the circumstances of the home, so there are no surprises later down the road. Since a home purchase is a large sum transaction, it’s important the buyer knows exactly what they are getting into. 


Understand the Closing Process With New 

Venture Escrow 

When it comes to home disclosures and inspections, it’s ultimately up to the buyer to decide how they want to handle the information they receive. If you need guidance and advice, New Venture Escrow can be a shoulder to lean on. Our experienced escrow officers will guide real estate agents, buyers, and sellers through every step of the closing process so they can secure their dream home! Contact us today to learn more.

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