Depending on where in the country you plan to invest, a property’s sales price can be elusive.
Ever heard the age-old mantra that you shouldn’t talk about politics or religion at the dinner table? Well, from a legal perspective, some states view property sales prices in the same way.
While this number is public record in most states, a dozen states have implemented real estate non-disclosure laws to protect their citizens’ privacy.
Say, what?
Ok, non-disclosure laws mean the sales price of property is not public record, making it difficult for investors to get a full picture of the market. And as you know, that’s critical info we need to make smart REI choices.
So, we’re gonna walk you through what a real estate non-disclosure state is and the 12 states that identify as a non-disclosure state.
What Is a Real Estate Non-Disclosure State?
In real estate non-disclosure states, a property’s sales price does not become public record upon the completion of a transaction.
But never fear! There are still ways to gain this information or, at the very least, make an informed estimate of the sales price. You might have to go through a few extra steps, which — bonus! — could actually help narrow your competition anyway.
What Is a Disclosure State?
The exact opposite of a non-disclosure state…
In a disclosure state, a property’s sales price becomes public record as soon as the sale is complete. This information is publicly available at the county office or even online. So, you can find the sales price for any property relatively easily and quickly.
This sales price disclosure makes information and market data more transparent, so you understand what comparable properties are selling for… whether you’re looking to put in an offer on a property or trying to decide a competitive price if you’re selling.
Even though this information is more accessible in disclosure states, investors in real estate non-disclosure states can find it, too. (More on that soon.)
Pros & Cons of Investing in a Real Estate Non-Disclosure State
Pros:
If you’re working with a real estate agent, they have access to the MLS, where all sales data is recorded. Even in real estate non-disclosure states, the National Association of Realtors (NAR) requires all publicly marketed listings to be published on the MLS within 1 business day of the first public outreach. It’s a national policy.
And, most MLS services will also require agents to submit sales data for a property, but there are some local variations regarding the rule.
The only reason a property wouldn’t be listed on the MLS is if the sale was completed by an owner or agent without MLS access, which is relatively rare.
And again, these additional hurdles to finding this sales info may weed out some of the competition who aren’t willing to do the due diligence to determine a property’s sales price.
Cons:
The downside of investing in real estate non-disclosure states is that some of the information you find will be an estimate instead of accurate data, and there may be variances from the actual sales price. The sales price might be less than the estimate, leading to financial losses. Eek.
So please, please, please do solid research.
How to Find REI Deals in Non-Disclosure States
Multiple Listing Service (MLS):
Like I mentioned… work with a knowledgeable real estate agent who has access to the MLS. They should be skilled at examining comparable properties and tax assessments to fully understand the market.
While a state may have non-disclosure laws, most property sales are still recorded on the MLS if an agent used the service to market the property.
Pro Tip: As an investor, you could also consider getting your real estate license
to gain access to the MLS yourself.
Property Appraisers:
Once an offer is accepted on a home, the buyer usually pays for a home appraisal. This appraisal is one of the factors involved when mortgage lenders assess the value of the property.
The lender is verifying how much the house is actually worth, as they will only give you a loan on that amount. If you paid wildly over market value, you may not be able to get a loan that covers the excess dollar figure. (Check out our blog post about the important LTV Ratio!)
As a seller, you could get an appraisal of the property before you list it, so you’d know an appropriate asking price.
County Assessor’s Office:
Even though the county can’t share a property’s sales price in a real estate non-disclosure state, it can share the assessed value, which determines the property tax. But this is still just an estimate and might not represent the current market.
12 Real Estate Non-Disclosure States
As promised, here there are…
- Alaska
- Idaho
- Kansas
- Louisiana
- Mississippi
- Missouri (county-to-county)
- Montana
- New Mexico
- North Dakota
- Texas
- Utah
- Wyoming
Fun fact: If you look at a map of the United States, these real estate non-disclosure states are located near the country’s center.
Except for Alaska, neither coast contains a real estate non-disclosure state.
That’s a Wrap — 12 Real Estate Non-Disclosure States
Just because a property is located in a real estate non-disclosure state doesn’t mean you shouldn’t consider investing in it. You’ll just have to do a bit of extra work and understand that there is less transparency around some property sales.
Talk to an agent with MLS access, property appraisers, and the county assessor’s office and review past tax records to gain a better understanding of the complete picture of a property or neighborhood.
As with any real estate transaction, you must do thorough due diligence before embarking on a potential deal…
From making an offer on a home to setting a competitive market price for a property, as an investor, do your research to make sure you’re making informed decisions every step of the way.
Now get to it!
