A material fact in real estate is any fact about the property or the transaction that a reasonable person would consider important when making a decision to buy, set a price, or move forward with a purchase contract—because it could affect the property’s value, desirability, safety, or the buyer’s ability to use or insure the home. In many states, certain material facts are required to disclose by law. In practice, that means sellers and often real estate agents (including a listing broker or agent) may have a duty to disclose and must disclose known issues like water damage, structural defects, prior repairs tied to serious condition problems, or other items that could impact a person’s decision. If parties fail to disclose something that must be disclosed, it can trigger claims for misrepresentation, legal disputes, contract termination, damages, and delays in the sale.

For more details, keep reading.

What Is Material Fact in Real Estate? (Definition + How It’s Used in Real Estate Transactions)

When people ask, what is material fact in real estate, they’re usually trying to understand what information is considered significant enough that it need to be disclosed during real estate transactions.

A material fact is not just any detail. It’s a fact (a piece of information) that would affect a buyer’s decision making—including whether they proceed, how much they offer, or what terms they ask for in the contract. A material fact can relate to the property itself, the seller’s knowledge of an issue, or circumstances around the transaction that could have a measurable impact.

Material facts vs. ordinary details

In real estate, not every detail is “material.” For example, the color of the living room walls is usually not a material fact because most potential buyers don’t treat that as a deal-breaker and it’s easy to change. On the other hand, a history of water damage in the basement may be material because it may signal ongoing moisture intrusion, mold risk, structural deterioration, or expensive remediation—things that could change a buyer’s decision to buy.

The “reasonable person” standard

A common way to evaluate whether something is material is the reasonable person lens:

• Would a reasonable buyer consider this important?

• Would it make a buyer rethink the deal, negotiate, or walk away?

• Would it could change the property’s value or future costs?

• Would it affect safety, habitability, insurance, or financing?

If the answer is yes, it’s likely a material fact, and it’s often considered something that must be disclosed or at least discussed honestly when asked.

Why this matters in residential sales

In a residential sale, the buyer typically has less information than the seller about the home’s history. That’s why disclosure rules exist: to reduce hidden risk, support informed decision-making, and reduce disputes after closing.

A big theme you’ll see throughout this article: disclosure isn’t just “being nice.” Depending on the states and the situation, parties may be required to share certain material facts, and failing to do so can become a legal problem fast.

Material Facts About the Property: Common Examples (Including Water Damage and Structural Defects)

Material facts are often easiest to understand through example. While the exact rules vary by states and local law, many disputes revolve around similar categories of facts about the property.

Below are common examples of issues that are frequently considered material in a real estate transaction—the kinds of things that may must be disclosed (or at minimum cannot be concealed or misrepresented).

Water damage and water-related issues

Water damage is one of the most common and expensive disclosure fights because it can be intermittent, hidden, and hard to prove later.

Water-related material facts may include:

• Prior flooding (even if it was “fixed”)

• Repeated water intrusion in a basement/crawlspace

• Roof leaks that caused interior staining or rot

• Plumbing leaks that damaged subflooring or walls

• Drainage problems around the foundation

• Prior insurance claims related to water

• Repairs tied to chronic moisture

Even if a seller believes the problem is resolved, the history can still be important to a buyer’s understanding of the property’s risk profile—because recurring moisture issues can return seasonally or under different weather conditions.

If a seller or agent has known water problems and tries to hide them, that’s the kind of scenario that often becomes a misrepresentation dispute after closing.

Structural defects or structural concerns

Structural issues often qualify as material because they can affect safety, insurability, financing, and resale value.

Examples include:

• Foundation movement or major cracking

• Settling that caused sloping floors

• Prior structural repairs (especially if ongoing)

• Framing issues, sagging rooflines, or compromised supports

• Retaining wall failures

Because these items can be expensive and can impact whether a buyer can (or should) buy, they’re typically treated as material facts that may be required to disclose.

Condition problems that affect use, safety, or value

Beyond water and structure, other common categories of defects and condition issues can be material, such as:

• Electrical hazards or known wiring problems

• HVAC issues that repeatedly fail

• Sewer line backups or known line collapse risks

• Pest or termite history and damage

• Mold issues connected to moisture

• Fire damage history (even if repaired)

• Unpermitted work (in many jurisdictions)

The key test is whether the issue would affect a reasonable buyer’s decision or the property’s value.

“But it was repaired”—does it still count?

This is a common seller question: if the problem was fixed, does it still need to be disclosed?

Sometimes yes, sometimes no—depending on:

• State disclosure form language

• Whether there’s a known ongoing risk

• Whether documentation exists (permits, warranties, invoices)

• Whether the repair is part of a larger pattern

In many situations, the safer approach is to disclose this information with context. It can actually help the sale by showing transparency and providing proof that repairs were handled properly.

Who Has the Duty to Disclose Material Facts? Seller, Agent, Broker, and Other Parties

In many real estate transactions, multiple parties have disclosure responsibilities. The exact scope depends on law, state rules, and professional standards, but these are the common roles involved.

The seller’s disclosure obligations

The seller is usually the primary party responsible for completing a disclosure statement or form in a residential sale. Sellers are often required to answer questions about the home’s condition, past repairs, and known problems.

Key idea: the seller’s obligation usually centers on what they known (their actual knowledge). If a seller truly doesn’t know about an issue, they may not be liable for not disclosing it—but they also can’t ignore obvious signs or make misleading statements.

What matters is whether they:

• disclose known material facts about the property

• avoid hiding or covering defects

• avoid inaccurate or incomplete statements that could be misleading

Real estate agents and brokers: separate responsibilities

Real estate agents and the listing broker often have their own obligations. Even if the seller is the one completing the disclosure form, agents can still have a duty to avoid misrepresentation and to disclose material facts they know.

Common situations where an agent may have disclosure duties include:

• The agent observes a red flag (e.g., fresh paint over repeated water staining) and knows the pattern

• The agent has prior knowledge from past listings or repairs

• The agent receives inspection reports or contractor notes

• The agent hears the seller describe an issue and realizes it’s material

Agents typically cannot knowingly participate in hiding defects, and they shouldn’t make statements that are untrue or that omit key facts a buyer would rely on.

If you’re planning a move or already a local resident, understanding how real estate agents handle disclosure and material facts is just one part of navigating a smart home purchase; for more helpful real estate guidance, check out Carol Klein WNY Homes.

Buyer-side agent responsibilities

A buyer’s agent may also have a role in supporting the buyer’s due diligence, spotting issues, and advising on questions to ask.

While the buyer’s agent isn’t usually the one who knows hidden facts about the home, they still have professional duties around:

• helping the buyer request disclosures and documents

• urging inspections and due diligence

• advising the buyer to get specialist evaluations when needed

“Required to disclose” depends on state and situation

Whether a party is required to disclose a specific item depends on:

• state real estate disclosure statutes

• local regulations and case law

• licensing rules for real estate agents and brokers

• the specific language on the required disclosure form

• whether the fact is material under the reasonable person standard

That’s why blanket statements like “you must disclose everything” can be misleading. The real rule is more like: disclose what’s required by law, and never conceal or misrepresent material facts.

What Must Be Disclosed in Real Estate? How to Think About Required Disclosures Without Being Robotic

People usually want a checklist: what must disclose items exist in a typical real estate deal?

The honest answer is that required items vary by states, but the framework below helps you determine what likely must be disclosed and what may still be wise to share.

Use the “could affect” test

A practical way to decide whether something is a material disclosure item is asking:

• Could this affect the home’s market value?

• Could it affect a buyer’s ability to obtain financing, insurance, or approvals?

• Could it affect safety or habitability?

• Could it reasonably influence a buyer’s decision or person’s decision to move forward?

If yes, it’s likely material.

Distinguish between “must be disclosed” and “should be disclosed”

• Must be disclosed: items explicitly called out by the state disclosure form or required by law, plus material facts you know that would be misleading to withhold.

• Should be disclosed (often smart): issues that aren’t always mandated but could prevent disputes, especially if discovered later.

In practice, the risk of withholding a known problem is that it can look intentional later—even if the seller thought it was minor.

Disclose this information clearly (and document it)

If you do disclose, quality matters. “There was a leak once” is vague. A better disclosure gives enough context to be useful for informed decision making, such as:

• what happened (what the issue was)

• when it happened

• what repairs were done

• whether there has been recurrence

• any documentation (invoices, warranties, permits)

This approach helps potential buyers evaluate the situation and decide what additional inspections they want as part of due diligence.

Timing matters in a transaction

Disclosures are most helpful when provided early enough for a buyer to:

• review the disclosure statement

• ask follow-up questions

• schedule inspections

• renegotiate terms if needed

• decide whether to proceed before they’re too deep into the process

Delaying disclosure until late in the transaction can lead to contract disputes, mistrust, and sometimes termination.

Why “fail to disclose” becomes such a big deal

If parties fail to disclose something material that they known, the buyer can argue:

• they relied on incomplete or misleading information

• they would have negotiated differently

• they might not have agreed to the purchase at all

That’s where legal claims like misrepresentation (and related remedies) come into play—especially when the omission involves high-cost problems like water damage or structural defects.