Real estate mistakes. Everyday in real estate there are errors.
In real esate we handle loads of paperwork, and receive phone calls at the most inopportune times. As we scramble to pull over to the side of the road to listen to a phone call, look for a pen or a pencil to write down the information, save the call info to cell, or replay a garbled message several times to hear the last bit of indistinguishable phone number...it is inevitable that we may overlook or omit something from a deal we are working. That's just another day in real estate.
I am sure there is a place in heaven with that last page of a missing fax with all the signatures that someone in your office just walked off with because they were in a rush! That isn't a consolation. It is just one more thorn in your side when you are trying to do your best for your client. 99.99% of the time every thing works out fine. If something were to fly under the radar by error under these circumstances it would probably be covered by your Omissions and Error Insurance E&O.
Over the years, thee are other kinds of blunders that may not be so forgivable. If you go into any real esate office you will hear about those deals! People will shake their head when the topic comes up, and they will share those stories like those bad stories on a reality TV show on Court TV. People will sit back and try to reconstruct the events that lead to an unbelievable outcome. I call them "Real Estate War Stories!"
Since I travel around the county, and get asked for my opinion pretty often I hear a lot of issues. Most are routine, and have an easy fix, and others...well even an intervention cannot figure out a starting point. Marketing and getting a contract on the wrong property could raise some eyebrows..and when the dust settles you could be left with a hefty legal bill. Another one is the presenting an offer where the contract states you are in receipt of earnest money when you are not can get sticky if things go crazy and the seller wants the deposit for liquidated damages. The only problem is that your pastor did not give it to you, and refuses to do so. Bogus checks, stolen checks and creative financing are warnings of another kind.Those are fraud! People involved with fraud like to work with new agents with big egos! Please keep in mind...E&O does not cover you if they view it as possible fraud!
A lot of errors are not necessarily committed by new agents, they often happen to seasoned agent that are working in a different area of real estate to help a friend. (Commercial, land sales, new homes sales etc..) Be careful, this isn't a race to finish first! Persons that rush you may not want you to review the deal too closely!
- When in doubt ask lots of questions! Go to your broker, not another new agent in the office!
- If your broker is never available, leave the office and go immediately to another office!!!
- If you think something is possibly wrong...? Listen to your instincts! Stop!!! Do not proceed!
- Run by issues that you do not understand with your real estate attorney!
- Not sure of a finance question call the loan officer or originator!
- Work with a mentor and have someone review the details of your first few listings, and contracts.
- When in doubt have your broker review your contracts!
- Ask for copies of plats, surveys, and deeds. Make photo copies for your files.
- Research the property for debts and liens before listing.
- If prices or facts are way out of line do not rule out Mortgage Fraud!
- Original contracts for all involved - Everyone reads on the same page!
- Make copious notes, and do not let any detail get away from your file!
- If the other agent is unresponsive, have your broker contact their broker!
- Never carry checks around - Follow brokers instructions!
- Always follow your state's real estate license law!
- No breaks for friends, they must follow the rules also! If things go wrong, they will not come to your aid!
- If you suspect fraud report your suspicions to your broker immediatley!
- If you have concerns or unanswered questions do not proceed foreward in the deal...!
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Yes I had a time when mortgage company tried to make a deal come together by mistating the buyers income. I found out after the fact and we didn't proceed with that loan. the longer you're in the business the more you are likely to come across some ilegal activity. But ignorance may not protect you so you better pay attention.
Ross Quintana - Team Quintana Real Estate
Spokane Real Estate Experts
www.TeamQuintana.com
Jim - This is an excellent reminder to always do the right thing and when in doubt be sure to ASK YOUR BROKER! I'm glad this one was featured!
You really put this together well. Sometimes I feel like I'm being pulled in too many directions and I have to STOP and take things one step at a time. The industry has changed so much and so fast and with the technology we have at our fingertips, we tend to want to rush or do more than we can possibly do. Often we have to do more and do it faster just to stay even with the competition. Or perhaps we just feel like we do..... Good job on the article!
Jim,
One of my agents is in possession of a degree from Yale and Duke Law school degree and is a member of the state bar of Georgia - she still has to have her contracts and all amendments reviewed by her broker prior to presentation.......a second set of eyes helps......and as you said it......if you even have to think about if it is wrong or not......it is wrong........great post
It only takes one potential issue to cure any agent of not wanting to keep all notes, emails, responses, showing records, CMAs, etc.
I remember feeling like I was such a burden to my BIC when I started in real estate. I thought, "Good Lord, he must get tired of the questions, ALL THE TIME." Nope, he was (and is) there for me. And I have avoided situations that could have been more troublesome than I understood at the time.
Jim,
Good point...all I know is I pay for E & O but never sat down to ask to see what exactly it covers...being with Remax....are all the offices covered the same?
This is a great list for everyone to remember and work with
Thanks
Rich
This is a great list for everyone to remember and work with
Thanks
Rich
Chrystina Tovani - Sacramento Real Estate Advocate It really is about doing things one step at a time. All too often we rely on technology and it let's us down! That is when mistakes happen! Something gets committed, while we are committing!
Julie Chapman Brunswick Georgia Real Estate Another set of eyes alwasy works! However think of it this way...there are always better ways to do things. There may be some great advice or insight gained by having your work reviewed!
kathleen melincavage I believe the most recent fraud is buyer presenting approval letters on defunct mortgage company letterhead trying to get he sellers to donate cash prior to closing to make the home habitable. They are betting you will not call to talk to processor.
Good points. The error I see most frequently is agents signing that they have received a deposit when they haven't. On the opposite hand - we should send letters confirming receipt of deposit rather than copies of checks, which could leave us open to litigation from the buyer regarding privacy issues.
Jim, excellent post! Mistakes happen all the time but remember it's the Brokers License on the line
When in doubt ask lots of questions! Go to your broker, not another new agent in the office!
AMEN!!
Colleen
AMEN!
I am printing this off and posting it in my office for our new agents...with your permission, of course.
Portland Oregon Real Estate >> Wayne B. Pruner, GRI Thanks! Brokers should share anonymously situations that arise in office meeting, and seminars! Experience is a great teacher!
Great post. I checked with one of my former agents last week only to find out he didn't get E&O when he opened his own company. No more referrals from me until he gets it. He did make application right away. But, I ranted and raved at that one. He has a logo but no E&O??????
I left a broker once who promised for 6 months that he would get E&O. Never did.
Got to have it.
Homefinders, Real Estate in MD & VA, Lenn Harley, Broker, New & Resale Homes Thanks Lenn, I often wonder about a lot of my friends that open up the small mom and pop shops in real estate, and I know they do not have E&O insurance! First things first!
Joan Whitebook In Atlanta in the last few years we saw lots of fraud. I would personally say it was drive by loand companies. We had lots of potential buyers calling for information that when asked if they had an agent...they told us the loan companies were providing them with real estate agents. It gets better...if they mentioned to us that we had more knowledge then their agents we were asked could we offer the same cash back as thier agents. If you asked was there a rebate, they said no, they were getting $15000 paid to them at closing. If you mentioned that was fraud, they hung up.
So the first point of contact used to be the agent for MLS data...now with the Internet, cheap rates may be the term that many home owners used first! Rebates and free!
This was a good list and an excellent reminder that when in doubt, ask the broker...after all, that is what we are there for!
I tell our agents to always make and keep notes about every phone call and discussion, whether you write on the file folder or keep sheets of notes in the file...it will save headaches in the future.
It is ALWAYS good practice to have another set of eyes review your contracts before submitting them...I have received too many where the buyer's agent put the purchase price in on the Escrow Deposit line...my seller would just love your buyer for putting the entire purchase price into escrow! I of course, politely ask the other agent if they truly meant for that to appear and get the usual, oh my gosh reaction. Goes back to do not rush when filling these out!
Dick Betts Thanks a lot. There are so many things we all know in real estate, and we forget to share them...while at the same time there are new people in the industry that need these questions and situations answered! Active Rain is the perfect forum to share!
Good list, Jim! Another item to remember is to brush up on your local MLS regulations and make sure you comply with deadlines. Agents can be fined for not updating the MLS with status changes or selling details. I hate scheduling a showing of a home and finding out that is already under contract!
Cheers,
Robin
I have heard of people whiting out and writing in different language than their loan borrowers, then photocopying the documents and sending them the underwriter. This was usually in last minute cases where the underwriter wouldn't have needed original documents. Talk about fraudulent.
When I started in the field, I worked for a real estate attorney for seven years. Once is awhile we would have a contract come across the fax in which there would be a $10,000 or $15,000 decorating allowance to the buyers. In actuality, this decorating allowance was really a way of bringing the sales price down, but the buyer would be funding a loan off the actual sales price on the contract in an attempt to get cash back at closing. We never accepted these contracts unless they were re-written.
Great post Jim. We all need to stay educated.
I had a client who was working with a lender who was doing all kinds of questionable things and promising her a loan. I asked the buyer how she came across this lender and if she had done any comparisons with others, etc. Ultimately, I suggested she consider switching lenders after her original one kept changing the closing costs, never supplied a good faith estimate, and many other things. She finally did talk with another lender who said there was no way in h.... he could qualify her for a loan. So the Buyer went back to her original lender.
Call me paranoid, but I just had this feeling that the buyer spoke with one of my suggested lenders only to avoid further questions and suspicions about her and the her lender working together to cut corners and find loopholes to get a deal done.
I confronted the buyer and told her if she chose to continue with this lender, then I just couldn't be her agent any longer. I cut them both loose. Sometimes you just have to walk away from trouble.
As a newer member of AR, how could I share this with someone who is brand new to AC and the business?
Hi Jim...Great post, when I read the first paragraph I though... Jim's is talking about me :O)
I always like to read your posts, I hope all is well,
Cheers
Fred Carver,Victoria BC Realtor Thanks so s much all is well here!
Enjoyed reading this post Jim. If I may make one suggestion it would be that since the audience is licensees, the post should be "members only".