Claim Alerts

Get It In Writing: Smart Advice that Really Does Pay Off

Over the past two years, there has been a modest uptick in claims targeting agents and brokers. Some attribute this rise, at least in part, to the fervent activity in the real estate market.

In the midst of this heated market, numerous prospective homebuyers encountered increasing levels of desperation. Many found themselves repeatedly outbid despite making offers, ultimately resorting to significantly surpassing the listed price in order to secure a property.

Some buyers were advised by their agents to ensure their offers were exceptionally appealing to sellers, even if it meant waiving inspections. This tactic occasionally led to success, with the offer being accepted and the buyer elated. However, as the once-booming markets have cooled, reality has dawned. Many buyers now grapple with feelings of regret and, in some cases, resentment towards their real estate agent.

The buyer thinks "My agent should have alerted me if I was overpaying... My agent should have cautioned me against waiving inspections... My agent should have pushed for the seller to cover a home warranty, and so on." Consequently, when new homeowners confront repair costs, many of them turn to claims against their agents, citing a lack of "good advice" during the transaction.

This underscores the importance of "Get It In Writing." Astute agents understand the significance of adhering to this principle. If opting to waive an inspection, it's imperative to document this decision in writing. Ideally, securing the client's signature on a waiver is preferred, but often, a confirmation via email will suffice.

Rely on your intuition, drawing from your experience and understanding of the client, to determine which discussions warrant written confirmation. Many claims against agents and brokers revolve around alleged failures to disclose property defects or conditions. With this in mind, it's crucial to "Get It In Writing" when discussing:

• Any inspections, such as home inspections, pest control, roof, structural, geological; whether to pursue inspections or waive them; and whether the client prefers to attend the inspection.
• After an inspection, if repairs are needed, does the client wish to inspect them personally to ensure completion? Does the client desire a final walkthrough before closing?
• Would the client find peace of mind with a Home Warranty? If the seller declines to cover it, perhaps suggesting it could be beneficial.

Recently, a regretful buyer expressed frustration by sending an assertive demand letter to their agent, outlining a list of repair expenses incurred over several months. He suggested that the agents had really “let me down” and should have insisted on the seller covering a Home Warranty, as even a basic policy would have offset most of the costs. Believing the agent's “sizable commission” warranted reimbursement for repairs, the client demanded restitution.

In response, the agent politely responded to the email, expressing sympathy over the client's repair expenses, but she had raised the issue of a Home Warranty with him prior to closing. She forwarded a detailed email thread from prior discussions, highlighting an instance where the Home Warranty was proposed to the client before the close of escrow. However, the client opposed the suggestion, dismissing it as a “waste of money”, citing concerns about service quality and deductibles. They opted not to risk upsetting the sellers, appreciating their patience with the closing date and declining to request further concessions.

Following the agent's email response, there was no further communication from the client regarding repair reimbursement.

Agents who prioritize "Getting It In Writing" have found themselves better equipped to manage or resolve claims much faster and easier compared to those who overlook this advice.

Documentation should be standard practice in every transaction. Without written confirmation, crucial interactions may be disregarded. While face-to-face meetings and phone calls foster rapport, written follow-ups offer protection and verification.

Moreover, written records aid in refreshing memory. Agents can't recall every detail from every client interaction, making well-documented files essential for professionalism and accuracy.

Simple practices like thorough documentation, follow-up emails, and adhering to "Getting It In Writing" can significantly fortify an agent's defense against potential claims or lawsuits in the future. ◆