Costly Errors Real Estate Agents Make

Costly Errors Real Estate Agents Make

Costly Errors Real Estate Agents Make

Real estate agents take pride in matching buyers with dream homes. When a client becomes unhappy, however, and sues for damages, a fulfilling career devolves into a nightmarish situation. Some cases may be trivial and easily resolved. For others, a lengthy court battle is guaranteed, even with adequate errors and omissions insurance, and a team of competent attorneys. Agents should diligently avoid situations where a lawsuit is bound to end in loss.

Undisclosed Disclosure and Misrepresentation

Keeping pertinent details a secret from clients is a one-way ticket to court. This includes information found during home inspection for existing properties and during development stages for new housing. Failure to inform buyers of known potential problems is actually a bigger problem for the agent and never worth the risk.

For one example, homebuyers make decisions based on current conditions. Buyers will rightfully pay inspection reports to assess the property's state and negotiate repair terms with sellers. Since a house may sit on the market for months, newer repairs may be needed. Consequently, if an agent neglects to include addendums as part of the seller's disclosure statement, a can of worms is opened. Once the buyer finds defective property after purchase, the agent is likely liable. This is one of many reasons why real estate professionals carry errors and omissions insurance, so costly repairs are not personal expenses.

First time homebuyers often make the mistake of not even ordering reports, solely relying on seller disclosures. The real estate agent who neglects to suggest inspection is not only doing a disservice to his or her client, but to the agent's own business. The agent should always urge clients to obtain third-party home inspections, and make all recommendations in writing. Whether the client chooses to be foolish is not relevant. In a court of law, as long as suggestions are made and acknowledged in writing, the real estate agent is covered.

Another instance of negligence is during the building phase. When the economy is on the upswing and housing is in full demand, selling a property unseen is not as difficult as it sounds on paper. During up cycles, residential lots may sell before construction is even halfway completed. In down cycles, developing lots may go for years unsold, negatively affecting a builder's finances. The real estate agent is obligated to let prospective buyers know if construction is due to halt for any reason. Any detail that affects a buyer's decision is crucial to convey. Since it is very unlikely that a homebuyer would purchase a partially completed house, this is cause for a lawsuit.

No one wants to lose a livelihood because of one claim and costly settlements. Maintaining sufficient errors and omissions insurance is a given for any professional real estate agent. Preventing lawsuits in the first place is the better ideal.

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