What documents are usually in a home disclosure packet?

In most U.S. states the packet includes a seller property questionnaire or Transfer Disclosure Statement, a Natural Hazard Disclosure (NHD) report, a home inspection report, a pest or termite report, and any seller-held records of past repairs, permits, or insurance claims. Some packets add roof, chimney, sewer lateral, or geological reports.

What are the biggest red flags in a home disclosure packet?

The issues that come up most often and cost the most to fix are: past water intrusion or active leaks, foundation movement or cracking, unpermitted additions or conversions, outdated electrical (knob-and-tube or aluminum wiring), polybutylene or galvanized plumbing, drainage problems around the foundation, and any contradiction between what the seller disclosed and what the inspector found.

What's the difference between Section 1 and Section 2 in a pest report?

Section 1 findings are active, current problems, such as active termite infestation or existing wood rot, and lenders often require these to be fixed before closing. Section 2 findings are conditions likely to lead to problems later, like a drainage issue or wood-to-soil contact, and are typically the buyer's discretion to address.

Does unpermitted work matter if the house looks fine?

Yes. Unpermitted work can affect resale value, insurance coverage, and your ability to get a permit for future renovations, since the city may require the unpermitted work to be brought up to code first. It can also signal that other work in the home wasn't done to code, even if it isn't visible.

Should I still get a home inspection if I already have the seller's disclosure documents?

Yes. Seller disclosures reflect what the seller knows or has been told, not an independent evaluation. An inspection from your own licensed inspector, plus your own review of the disclosure documents, gives you two independent views of the property's condition.

DisclosureDesk › Disclosure Red Flags Guide

Buyer's guide

Home disclosure red flags: what actually matters

Most disclosure packets run 60–150 pages across several separate documents. Almost none of that length is wasted on the handful of issues that actually change what you should pay, or whether you should buy at all. This guide covers the documents you'll receive, the red flags worth losing sleep over, and the questions to ask before you write an offer.

What's in a typical disclosure packet

Exact requirements vary by state, but a U.S. residential disclosure packet usually includes:

Seller property questionnaire / Transfer Disclosure Statement — the seller's own account of the property's condition and history of repairs, defects, and claims.
Natural Hazard Disclosure (NHD) report — whether the property sits in a flood zone, wildfire zone, earthquake fault zone, or similar designated hazard area.
Home inspection report — a licensed inspector's assessment of the structure, roof, electrical, plumbing, and major systems.
Pest or termite report — findings on wood-destroying organisms and conditions that could lead to them.
Supplemental reports — roof certifications, sewer lateral inspections, chimney inspections, geological or soils reports, and HOA documents where applicable.

The red flags that matter most

Past or active water intrusion

Water is the single most common source of expensive, hidden damage. Look for phrases like "prior water damage, repaired" or "evidence of past moisture" — these are worth asking the seller to explain in writing, since "repaired" doesn't tell you whether the underlying cause was fixed.

Foundation movement

Hairline cracks in a slab are often cosmetic. Stair-step cracks in a foundation wall, doors that stick, or an inspector noting "recommend evaluation by a structural engineer" are not. Foundation repair is one of the few costs that can run into the tens of thousands.

Unpermitted additions or conversions

A converted garage, added bedroom, or finished basement done without permits can affect square footage claims, resale value, insurance, and your ability to pull permits for future work. It doesn't automatically kill a deal, but it changes what you should offer.

Outdated or unsafe electrical

Knob-and-tube wiring and, in some regions, aluminum branch wiring are flagged by many insurers and can affect insurability or premiums. This is worth confirming with your insurance agent before closing, not after.

Problem plumbing materials

Polybutylene pipe (common in homes built roughly 1978–1995) and older galvanized steel pipe are both known for premature failure. Their presence isn't disqualifying on its own, but it's a real, foreseeable replacement cost.

Drainage and grading issues

Poor drainage around the foundation is the quiet cause behind a lot of the water intrusion and foundation problems above. It's cheap to fix early and expensive to ignore.

Contradictions between documents

The single highest-value thing to check: does the seller's own disclosure say "no known issues" in an area where the inspector found evidence of a past problem? Contradictions like this are a signal to ask direct follow-up questions before you remove contingencies.

Reading the pest / termite report

Section 1 findings are active, current problems — active infestation, existing wood rot, wood-to-ground contact currently causing damage. Lenders often require these to be corrected before closing.

Section 2 findings are conditions likely to lead to problems in the future, such as insufficient ventilation or a minor drainage issue. These are typically left to the buyer's discretion, but are useful leverage in negotiation.

Costs that don't show up in the inspection report

A standard inspection is a snapshot, not a forecast. It won't tell you that the roof has 3–5 years of life left, that the deck ledger board will need attention in a few years, or that the sewer lateral is original clay pipe and due for a camera inspection. Ask about age and remaining lifespan for the roof, water heater, HVAC system, and any decks or retaining walls.

Questions worth asking before you remove contingencies

Is there anything in the inspection or pest report that contradicts what you disclosed?
Were any repairs done with a permit, and can you provide the permit numbers?
Has the home ever had a water, fire, or other insurance claim?
Is there a sewer lateral inspection, and when was it last done?
What's the age of the roof, water heater, and HVAC system?

When it's worth bringing in a specialist

A general home inspector's report is a starting point, not a final word. On some findings it's worth paying for a narrower, deeper opinion before you write an offer or remove contingencies; on others it isn't. A simple way to decide: weigh the cost of the specialist against the cost of being wrong, and how much the answer would actually change your offer.

Finding	Who to call	Worth it when…
Foundation cracking, sloping floors, sticking doors	Structural engineer	The inspector recommends further evaluation, or the repair cost could run into five figures
Roof "near end of life" or storm damage noted	Licensed roofer	The inspector can't say remaining lifespan with confidence, or a full replacement is plausible
Old sewer lateral, tree roots near the line	Sewer lateral specialist (camera scope)	The line hasn't been scoped recently, or the city/district requires certification to close
Knob-and-tube, aluminum wiring, or an outdated panel	Licensed electrician	Your insurer flags it, or the disclosures don't say when it was last updated
Visible mold, musty odor, or past water intrusion	Mold / moisture specialist	The affected area is large, or the original cause was never confirmed as fixed
Hillside lot, retaining walls, visible slope movement	Geotechnical / soils engineer	The NHD flags landslide risk, or you see cracking in retaining walls or hardscape

When it's usually not worth the extra spend: minor, already-disclosed cosmetic issues; anything the seller's disclosure and your own inspector already agree on and priced in; or findings small enough that no plausible specialist opinion would change whether you buy or what you offer.

Informational content only. This guide is educational and is not professional, legal, or financial advice. It is not a substitute for hiring your own licensed inspector, engineer, contractor, or attorney — always hire your own experts before making a purchase decision.

Don't want to read all 150 pages yourself?

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This guide is general information, not professional advice, and isn't a substitute for a licensed inspector, contractor, or real estate attorney. Disclosure requirements vary by state; confirm specifics with your agent or a local attorney.