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 March 03, 2008

Local Disclosure Laws Can Have a Big Impact on Home Prices
Two recent studies found that local disclosure laws which require real estate practitioners and sellers to provide buyers information regarding a neighborhood (whether it is in a flood zone, airport noise zone, etc.) can decrease home prices by the thousands of dollars.
The two studies examined home prices one year prior to disclosure laws having been passed in some states, and for one year afterward. They found that some homes already sold for 4% less than similar homes in areas farther away. According to Jaren Pope, one year after new disclosure laws were enacted, the prices of those homes near the airport dropped an additional 3% in value.

In areas which are considered flood zones, there was a drop of 4% in value following the enactment of new disclosure laws in the state. Prior to the new laws, there was no difference in values from non-flood zone areas.

Pope states that nationwide, similar disclosure laws have been enacted, however there is no standard, and specific tenets vary from county to county and state to state. This variance in law can make the situation more difficult for both buyers and sellers.

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