What Is a Material Defect in Real Estate?
A material defect is any problem with a property that significantly affects its value, safety, or habitability — and that a reasonable buyer would want to know before closing. Sellers are legally required to disclose material defects, whether selling traditionally or FSBO.
✅ What Counts as a Material Defect?
- Safety hazards: Faulty wiring, carbon monoxide issues, foundation instability.
- Major structural issues: Cracks, settlement problems, roof failure.
- Water damage or leaks: Roof leaks, basement flooding, mold growth.
- Systems that don’t function: HVAC failure, plumbing problems, non-working electrical systems.
- Environmental hazards: Lead-based paint, asbestos, radon, or contaminated soil.
- Hidden defects the seller knows about: Any concealed issue affecting value or safety.
If a defect affects what a reasonable buyer would do or pay, it’s almost always considered “material.”
💡 Why Material Defects Matter for FSBO Sellers
- Required disclosures: Most states require sellers to disclose known material defects on a seller’s disclosure.
- Legal protection: Full disclosure helps prevent lawsuits after closing.
- Fewer surprises during inspection: Being upfront reduces negotiation issues and repair disputes.
- Helps buyers trust FSBO sellers: Transparency builds credibility when listing on the MLS through a flat fee MLS plan.
📍 FSBO Tip: When in Doubt, Disclose It
If you're unsure whether something qualifies as a material defect, disclose it anyway. Buyers will likely discover major issues during the home inspection, and hiding a defect can lead to legal trouble.
If the defect is costly, consider offering seller concessions or a credit instead of making repairs yourself.
📚 Related Resources
Looking for more real estate terms? Visit our Real Estate Dictionary.
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