Disclosure, Thoroughness, and Broker Awareness

There has been a recent California case of interest* regarding the importance of full disclosure. Full disclosure not only by sellers but agents too. It also brings up the importance of the role of the broker in all office transactions. As a manager and agent of a real estate office, the implications of this case are of particular interest.

My disclaimer: Let me make it clear that I’m not an attorney nor am I a legal expert. I’m presenting my thoughts and observations only based on the presentation at a recent California Association of REALTORS conference.

In this case, a real estate agent had a friend who was the son of the owners of a property. The agent was asked by his friend to come take a look at the house and meet with the owners. The agent, during the course of meeting with the owners, completed a visual inspection and wrote down what he had noted. The owners did not list the home with the agent; however, an agent from his office (referred to now as the buyer’s agent) brought in the buyer. As fate would have it, the agent “friend” ended up being the transaction coordinator; his “original” written visual inspection never making into the hands of the buyers though. The buyers (and later the new owners of the property) later learn that there is approximately $500,000 in repairs (per a soil engineer) that need to be done in order for them to do some remodeling work. The buyer’s agent had noted several items down on a visual inspection form (but not everything the other agent had noted and not to the same level of detail). Needless to say, through some rather odd sequence of events, the buyers learn of the original visual inspection and get a copy of it from the first agent. The new owners sue stating that 1) their agent’s inspection was not thorough, 2) fraud, and 3) that the real estate broker should have seen the original agent’s inspection and provided it to the buyer prior to the transaction (negligent non-disclosure). Although, I’m not clear on all the details after that, we can learn several items from this case.

1. It is extremely important that agents (in fact, everyone involved in the transaction) be diligent in their visual inspection and agents need to write everything down—even if it appears minor. The new AVID (Agent Visual Inspection Disclosure) form is a wonderful addition to the TDS (Transfer Disclosure Statement)—I used to write pages and pages on a separate addendum until the AVID form was created. With that said, it surprises me that the original agent (friend) wrote down his findings without first having a listing, but having done so, that information should have been provided (this seems to be the recommendation). Not being a part of this transaction though, I would not dare to point fingers as each situation is different, and the agent may have done so in these unusual circumstances in an effort to help his friend’s parents. I believe the agent friend was indeed doing his best to meet the high ethical code that we REALTORS have—not knowing the outcome of how this would play out. There does appear though to have been a kink in the communication and presentation of the information. Regardless, I believe this is a wonderful opportunity to learn from (sadly, at the expense of others).
2. In addition, broker offices need to come up with a policy and/or tracking system in order to best serve their clients.

* Michel v. Palos Verdes Network Group

Staying Current in Real Estate

It has become even more vital in today's real estate market to become involved and stay current in all things related to real estate; not only at the state level, but also the national level, and, for most REALTORS, to become even more comfortable with technology so we can better serve our clients.

I have attended three real estate conferences since last October: two state conferences (C.A.R.) and one national (N.A.R.) and am amazed at the real estate-related information presented. Whether that information was about the state of the market, podcasting and other communication tools, mortgage and legislative happenings, it is even more important to be aware of what is happening in our industry.

In an effort to better serve my clients, I've changed my website and added this blog, podcasting (to be up and going soon!), and chat. There are also the wonderful maps and other information such as pictures, virtual tours, videos, and area statistics--all things that people in surveys said they want to see when trying to find a property. Other “technological” pluses I offer are digital signatures. This comes in handy for my out-of-area clients and my clients that have busy schedules and like that they can easily sign contracts with the click of a button from an email I send them.

I’ll be attending three more real estate conferences before the end of 2008 (two state and one national) and look forward to sharing with you more about these conferences and how that information could impact you.

More detailed information from my past conferences and other real estate and community information will be posted in this new blog. I look forward to hearing from you and providing requested information here.