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A Tale of Three Buyers

I have just lost the biggest potential buyer thus far in my career...because I require my buyers to sign an exclusive buyer's agreement contract.

This potential client figured I'm just trying to guarantee I get paid and was upset.

I explained the difference between CLIENT care vs. CUSTOMER care, Errors & Omission Insurance, Negotiation for best terms on their behalf, confidentiality, and no additional cost...but he wasn't listening to anything else.

It's a 2 way street - yes, I do want to get paid. And I don't want to fight another agent for my paycheck. I want no confusion on who gets a commission. That's fair and anyone can see that.

But here are three cases I have personally been witness to in my five short years of real estate. I have wept for and with buyers, and I am committed to preventing this from happening to my clients.  It's a ton of work and I'm happy to do it - for those who commit to me, as I commit to them.

Case Study #1 "Black Mold"

What happened:  Lack of disclosure, hidden defects, black mold found

•·         Buyer purchased home from listing agent without buyer's agent.

•·         Listing agent was related to seller, which was not disclosed.

•·         Agent and seller were aware of and did not disclose hidden long term water damage, which had been covered by the seller.

•·         The home inspector was recommended by the listing agent.

•·         Listing agent was related to the home inspector.

•·         Home inspector ‘did not find' any mold or damage.

•·         After closing, extensive black mold was found in attic and walls.

•·         Repair and remediation cost = 10% of home's purchase price.

•·         After long, expensive & frustrating lawsuit, court awarded ¼ of cost of repair & remediation.

•·         Client developed ulcer.

How Representation would have helped:

•·         Buyer's agent would have recommended a selection of inspectors for the buyer client to choose.

•·         Buyer's agent would recommend mold testing by a mold sniffing dog, since there is currently no insurance protection if mold is found in a home.

•·         Buyer's agent would have advised buyer client to request CLU report from insurance agent, to review claims against property over last five years.

•·         Errors and omission insurance would have aided the buyer if the agent made a mistake or overlooked pertinent information available.

 

Case Study #2 "Open House"

What happened:  Procuring cause, no choice of agent, double earnest money

•·         Buyer attended open house without choosing buyer's agent.

•·         After choosing buyer's representative, buyer decided to go back to same house & make offer.

•·         Listing agent declared procuring cause and would not allow buyer to use their agent.

•·         Listing agent appointed another unknown agent in brokerage to "represent" buyers.

•·         Listing agent demanded double earnest money to secure sale, on behalf of seller.

•·         Buyers were highly upset and could not get questions answered.

•·         Buyers were not given comparable sales and detailed background information on home.

•·         Buyers were worried about losing home and did not want to ruin the deal, so felt they couldn't speak up for themselves.

•·         Inspection phase was unsettling for buyers without chosen representation.

•·         Seller wouldn't agree to any repairs buyer wanted.

•·         Buyers were from another country and didn't want to have problems, so they accepted house as is.

•·         Buyers were not able to negotiate the possession and terms they wanted, affecting their lease.

•·         Buyer's experience was awful and they have nothing good to say about the brokerage or realtors in general.

How Representation would have helped:

•·         Buyer's agent would have negotiated lower earnest money if possible.

•·         Buyer's agent would have requested repairs and used defects to negotiate for repairs or concessions.

•·         Buyer's agent would have provided answers to all questions, including negative features, better buys, uncertified tax assessments, etc.

•·         Buyer's agent would have provided representation, help and protection for buyer.

•·         Buyer's agent would have arranged timing that suited the buyer, without incurring additional storage and rental fees - or arranged for seller to assist buyer with costs.

•·         Buyer's agent would not have allowed buyers to be disadvantaged by nationality & cultural differences.

Case Study #3: "No Realtors Allowed"

What happened:  Unrepresented seller (For Sale By Owner) refuses buyer's agent, house needs expensive repairs after closing.

•·         Buyers had implied relationship (no contract) with agent and wanted to have buyer representation.

•·         Buyers visited FSBO property without agent, fell in love with the house and wanted to buy it and then called agent.

•·         Seller refused to allow agent to represent buyers, even if buyers paid 3.5% commission or offered over full price to include such.  Seller had his attorney draw up contract for sale.

•·         Seller refused to produce residential property disclosure, stating he never lived at the property. However, seller was well aware of problems since he had remodeled the property extensively.

•·         Buyers did not do a home inspection, since they didn't want to offend the seller.

•·         Buyers did not negotiate price, again, because they didn't want to offend the seller.

•·         After closing, expensive repairs were found to be needed.

 How Representation would have helped:

•·         Buyer's agent would require disclosures, and would have looked for any previously available disclosures, as well as checked with neighbors or the city as to permits, code violations, known issues, etc.

•·         Buyer's agent would have recommended a selection of inspectors for the buyer client to choose.

•·         Buyer's agent would have advised buyer client to request CLU report from insurance agent, to review claims against property over last five years.

•·         Buyer's agent would have negotiated price as a third party, protecting the buyer's interests.

Just three of many reasons why I work with buyer's agency agreements. 

It's a first and foremost a protection for my CLIENTS and as a bonus, it's a protection for me. 

 

Dawn Maloney, REALTOR®,  Luxury Home Marketing  RE/MAX Haven Realty

Direct:  (330) 990-4236         Email: dawn@dawnsold.com

Helping home buyers and sellers in Summit, Portage, Stark, Medina, Wayne, Lake, Geauga and Cuyahoga Counties since 2003.

All content ©2006-2014 by Dawn Maloney, REALTOR® unless otherwise noted.

 

 

Comment balloon 47 commentsDawn Maloney • April 24 2008 11:42PM
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