Relying on listing agent is mistake #1
Home Sale Hindsight
By Tara-Nicholle Nelson, Tuesday, July 7, 2009.Q: I've lived on the West Coast my whole life, but in 2006 decided to buy a place on the East Coast to move into. I found a place on the Web, called the listing agent and bought it (I did get an inspection from a contractor she knew, but he didn't find any big problems.)
I moved there for one month before I had to move right back out because I was constantly sick. After extensive testing, I learned that the house was riddled with mold from a leaky, unsafe addition that the previous sellers had put on the house without permits. When we went to get the permits for all the mold repairs, the city actually ordered me to tear the addition off -- the problem was, the addition was about a third of the house's square footage!
I decided to stay where I was and just sell the East Coast house, but in order to even put it on the market, I had to tear down the addition and do all the mold work, which cost me over $50,000. It is on the market now, but now I owe so much more than it is worth that I have to do a short sale.
I'm suing the sellers now, because there are many indicators that they knew about the mold and the addition's problems and concealed them, but put all their money from selling this place to me into their next house, which they've homesteaded, and that house has depreciated, too. They're also from a foreign country, so we feel they're likely to just move back if we get a large judgment. What should I have done differently?
A: I pride myself on not being a knee-jerk-type gal. However, my knee-jerk reaction to stories of this sort is always to track back to inspections to ferret out where things went wrong. I know you had a property inspection -- did you attend it? Attending inspections is how smart buyers get the dirt (or the mold, in your case) on all the suspicions, suggestions and solutions the inspectors can't or won't write down due to company policies, liability reasons or because it's not strictly within the scope of the formal inspection. Had you been there, in living color, your inspector might have suggested that you explore the legality of the addition, either of his own accord or as the culmination of a conversation with you.
And who did your inspection? You mentioned a contractor, but the proper professional to conduct a pre-purchase property inspection is a certified property inspector who also holds a state license, if your state offers or requires one. Whether your inspector had an insurance policy that would cover your damages from their errors and omissions -- like missing major construction defects in the addition, whether or not it was built with permits -- was also an important qualification that it sounds like might have been missing.
Also, you don't mention whether you read the inspection report and/or followed up on any excluded items or recommendations for further, special inspections -- many buyers don't, and can often trace the problem that they felt "shoulda, woulda and coulda" been detected back to a specialists' inspection they "shoulda, woulda and coulda" obtained if only they had read their property inspectors' report and followed up on the recommended further inspections. Should your real estate agent have pointed these things out to you? Of course, in an ideal world (which you might have figured out by now is not precisely identical to the actual world in which we live). But whose responsibility is it to read your inspection reports and ensure that all information relevant to making an informed decision whether to buy a property is in your possession before your contingency or objection period expires? Yours. ...CONTINUED
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Submitted by Anita Crum on July 7, 2009 - 6:28am.
You made some excellent points in your response but there's one point that wasn't fully addressed. Who represented the buyer? The post states that the buyer "called the listing agent and bought it". The listing agent represents the seller so certainly wasn't necessarily looking out for the buyers best interest. Not saying that the listing agent necessarily did anything deceptive, but his/her duties are to his/her client which in this case is the seller, not the buyer. Of course the agent could have been representing both parties through the dubious auspices of dual agency (a entirely different issue that I won't go into here).
In any transaction, but especially in a long distance one where you are not able to be present "on site", it's always best to have someone who is there to represent you exculsively. Someone who will be your eyes and ears and advise you to do things like have additional inspections done.
Anita S. Crum
Associate Broker
RE/MAX Peninsula
anitacrum@remax.net
Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on July 7, 2009 - 10:49am.
The title of the post certainly draws attention, and thank you for pointing out other fair and balanced points of view.
Although the listing agent does represent the seller, even as a Transaction Broker (Florida), agents owe a certain degree of honesty to all parties.
In Florida and in the company I work with, I'm also able to represent my client (buyer or seller), as a Single Agent. This leads to an even higher level of fiduciary to the detriment of all parties.
However, in neither case can I be negligent. IF I know of a problem and I don't reveal it, I can be in a heep of trouble if or when the you know what hits the fan.
It is entirely possible that the agent did not know of the existance of mold (after all, most agents are not experts in the field and only a properly conducted culture could determine this outcome with certainty and even reveal the kind there is), and may also not be in any obligation to point out any specific problem areas (again, being that they have no expertise one way or the other). That's what inspection experts are for and even they have their own disclaimers.
Buyers need to be specially carefull when buying accross boarders and of not being present at inspections to see for themselves and ask every question they can think of - regardless of how dumb the question may seem.
Also, buyers who feel that not being represented by an agent are somehow saving themselves something, need to understand that they're making a similar mistake than one who pretends to represet themselves in court might make.
Buyers - in any market weather seller's or buyer's market - must find a reputable agent that represents THEM and THEIR interests when buying real estate AND even seek the advise of attorneys and other experts like licensed inspectors.
Buying the biggest ticket item most people will own in their lifetime is not one that can be done without having specific expets in their perspective fields perform their specific tasks.
In surgery, the surgeon does not trust anesthesia to anyone other than the anesthesiologist. Why then trust inspections to a contractor, not trained, licensed or certified to perform inspections?
Have you heard of Michael Jackson's doctor who may have been illegally practicing medicine in CA? He was licensed in two other states, but not in CA. In CA, that is illegal and that doctor should not have been hired. If MJ had flown to the state where the doctor was licensed and received medical attention in that state, things might be different for that doctor (and perhaps even for MJ). Therefore, find local experts who understand local laws and procedures.
Most people will not purchase a used car without having a trusted mechanic look at it, or undergo any kind of surgery without seeking 2nd oppinions.
Why on earth would anyone purchase a home without the expert help and advise of full-time, active agents, inspectors or attorney/closing agent? Not a smart move.
What should the reader have done differently?
1) Seek a Realtor (not all real estate agents are "Realtors" - members of a local board and the National Association of Realtors who adhere to a Strict Code of Ethics), that represents THEIR best interest. Don't hire the listing (seller's) agent but a buyer's agent to represent YOU.
2) Hire a Inspector Licensed according to local/state laws.
3) Be present during the inspection and ask any and all questions that come to mind (during the inspection and after receiving the report).
4) Make sure to receive a Seller's Disclosure (required in Florida) that reveals all known defects to the seller, weather hidden or not
5) Make sure - if any additions are made, to consult with city officials to see if they're legal and done with permits. If not, the city could later go after the current owner regardless of the fact that the property was purchased with the improvements made by the previous seller - they'll hold the current homeowner accountable
6) When in doubt, consult a competent real estate attorney to see if/how the matter may be addressed or resolved BEFORE closing or walk away
It is much better to pass up a seemingly "good deal", than to end up holding the bag on a bad deal.
Above all: Learn and make sure it doesn't happen again.
Luck, is When Preparation Meets Oppotunty
Certified Distressed Property Expert
http://MiamiRealEstateKing.YourKWAgent.com
BLOG: http://MiamiRealEstateKing.WordPress.com
Twitter: http://Twitter.com/RealMiamiEstate
Miami / Miami Beach, Florida
Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on July 7, 2009 - 10:52am.
Just wanted to clarify...
"...and may also not be in any obligation to point out any specific problem areas..." in the context that it is not specifically known to the agent and may require discovery by a licensed or certified expert in the specific field.
Certified Distressed Property Expert
http://MiamiRealEstateKing.YourKWAgent.com
BLOG: http://MiamiRealEstateKing.WordPress.com
Twitter: http://Twitter.com/RealMiamiEstate
Miami / Miami Beach, Florida