Caveat Emptor or Totus Caveo?

CAVEAT EMPTOR OR TOTUS CAVEO?

One phrase most people are familiar with is Caveat Emptor “Buyer Beware” and it has a well documented history in our judicial/legal system. This phrase was and still is commonly heard after someone buys a lemon (car) or a house that has numerous problems. Prior to an evolutionary change in consumer protection laws that came about in the 1970’s consumer activism phase of our country this phrase was pretty much a get out of jail free card for sellers of less than perfect items who were not exactly forthcoming about the deficiencies of their products/homes. In today’s consumer protected and quick draw legal trigger fingered society the more appropriate phrase is Totus Caveo meaning “All Beware”. A real estate transaction can have numerous parties involved on both sides to get to the finish line of transferring a property from seller to buyer and a weak link in any part of the chain can cause a legal headache/nightmare for all parties involved while the legal maneuvering and slow moving wheels of justice release and/or find the parties innocent or guilty of wrong doing.

Another ramification that is less severe than a lawsuit, but much more likely to occur and is just as deadly to a real estate career is that the buyer moves on never to be heard from again, never mentions the realtor, never refers anyone to the realtor, as far as that client is concerned the realtor does not exist anymore. For a real estate career this is not so much a death blow, but more like a slow moving cancer that eats away at the livelihood of the realtor and will hamper, stunt, or cripple a realtor before the inevitable death of the career. It takes way to much time, effort, and money to get the phone to ring to be one and done with a client. In uncertain troubled times/markets such as this one, and even in fast paced deal a day markets your past clients are your lifeline to your real estate career and outside world, and if they feel wronged, slighted, cheated in anyway, well that is one less stream for you to pan gold in future times and you will most likely never even know it, thinking everything is A-OK and that these people are recluse/losers that do not know anyone that is buying/selling real estate ever!

We recently came across two studies that found that 83% and 87% of all buyers look to their real estate professional for referrals of vendors/contractors for services that are necessary to purchasing a house. Including but not limited to title companies, mortgage professionals, home/termite inspectors, insurance and the list goes on. This places a tremendous amount of trust/burden/legal ramifications on a realtor’s shoulders and one weak link or mistake in the long seemingly endless real estate transaction chain can land everyone involved in hot water.

The following are two of numerous scenarios we have first hand accounts of about local real estate transactions.

1) My father owns a small realty company on the Main Line in Pennsylvania and I grew up hearing all the horror stories about real estate transactions before, during, after the deals were done. His firm had a listing that one of the Philadelphia 76ers ended up purchasing; the player went with all the realtor recommended vendors as his agent/attorney was not well versed in local ways. Long story short, realtor recommended home inspector missed obvious major structural issues, player has lawyer sue everyone, father pays $6000 in legal fees and is released by Judge in suit prior to trial for no wrongdoing, everyone else is left to fend for themselves and slug it out. The end result is that even though my father won the lawsuit he still lost $6000 plus his time to be released fairly early in a suit (before trial) by a Judge who found no wrongdoing on his part. All because the other realtor recommended a weak link.

2) Our office recently received a call from a buyer about performing a home inspection for a property they were under agreement of sale to purchase. The first question was not about price or time/dates available, the caller wanted to know if they would be allowed to be present at the home inspection. After further probing on this issue during the home inspection it turns out that the client wanted to attend the inspection because the last house they purchased, the realtor recommended home inspector/firm did not allow the buyers to attend the inspection. As it turned out this company inspector missed a major roof installation defect that ended up costing the new owners $5500 within the first 30 days of home ownership, than the realtor recommended title company missed a lean on the house that was not discovered until after the new owners had signed the papers creating another headache within the first 30 days of ownership, and the realtor recommended mortgage professional did not deliver on his lowball quote and had changed all the terms/conditions of the mortgage at the last minute at the signing table putting the buyers in a very disadvantageous position, somehow I do not think the move-in gift basket made up for all these weak links.

Ironically during the inspection that very realtor called the client during our inspection because she saw that her old clients had their house for sale and wanted to know why they had not called her for the listing. Most of the conversation at this point is not printable in G rated language, but to paraphrase the client’s response to the realtor. Why would we use you again? your home inspector missed major issues with the house, your title company dropped the ball on the only thing they really do which is look for leans on a title, and your mortgage rep is a liar and a thief. This transaction did not end up in court, but that realtor lost a valuable resource and lifeline to her real estate career all because she recommended weak links either knowingly or unknowingly.

I went to business school and one of the best concepts I got out of that education that has proven invaluable in the business world. Is surround yourself with great people, make sure they have the training/equipment they need to do a great job, set a list of great goals/parameters for success and then monitor and stay out of the way gracefully. If you are a real estate professional you are placed in a great position of trust/responsibility, how you handle that trust is paramount to your success as a realtor and more importantly as a human being. If you are knowingly recommending weak links or vendors that represent your interest over your clients than good luck and by the way your career has cancer as your clients will know this even if they never bring it up. If on the other hand you surround yourself with great people/professionals, you know the kind you would only have work on your children’s real estate transaction. Than you are on your way to a great career in real estate and do not have to look over your shoulders or wonder why your business line is not ringing.

If you think that you and your real estate career are worth the best. Than shouldn’t you surround yourself with the best and brightest the industry has to offer. If you build a great real estate team and market it appropriately buyers and sellers of real estate will come, it can be no other way as that my friend’s is a law of life that no one can undo. Placing others interest ahead of my own is one of the keys to a successful life and career. Who’d thunk?

One way to protect you and your client’s interest is to have vendors you recommend add you as an additional insured, this way you will be notified if that vendor has dropped insurance. ASHI has lost over 28% of its membership in the last two years, the state of New Jersey anticipates that close to 30% of licensed home inspector’s are not going to renew their licenses this April. Can your career really handle any weak links? If you are just starting out in a career in real estate than come out of the gates strong by surrounding yourself with the best and brightest the industry has to offer, if you have been around the real estate trade for sometime and your career is floundering than take a good hard look at your business practices and cut off the weak links that are holding you down. Life is very forgiving and we can start over at anytime. So if your career is in the toilet, what are you waiting for? Stop reading this crap and go cut off those weak links.

Thank you for your time,

Brian Connelly