It is not the agent's responsibility to know what repairs are needed! Really?

Real Estate Agent

15yFollow

It is not the agent's responsibility to know what repairs are needed! Really?

Joshua D.Pro Member

BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes

I saw a post on Twitter that I had to respond to . . . of course, the response and initial post are priceless, IMO.

First Tweet:

My Response:

Her response:

Am I in the wrong here? Or, is it the responsibility of a listing agent to know these things?

I look forward to your feedback here, and if you feel like responding on Twitter, I've supplied links to the 3 tweets above.

Podcast Guest on Show #100

0 Reply

28 views

Most Popular Reply

Jon Holdman

Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes

15y

IMHO agents are salespeople selling houses. They're not contractors nor inspectors. They might be able to point out obvious problems and might give ballpark figures as to costs, but that's not their responsibility.

4 Reply

See this reply in the discussion

30 Replies

Jump to latestLatest

Sort by

Rusty Thompson
Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes
15y
In my area they are supposed to know & disclose all know repairs needed on most properties, but that does not apply to Foreclosures. Because the bank can not know what is needed, there is nothing to disclose (even if there is something obvious. Only once its inspected does the Real Estate agent have to disclose any repairs needed.

Though that does seem a bit odd to give such a short and some what rude answers.
0 Reply
Anthony C
Real Estate Investor · Cold Spring Harbor, NY · Member since 2011 · 104 posts · 16 votes
15y
At least in NJ, when a property is listed with an agent, owner is required to fill out a full disclosure form where they answer comprehensive questions on the condition of practically everything.

The agent is therefore in the know of these conditions and are legally bound to disclose these to the buyer... IF they ask.
0 Reply
Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
15y
Banks are not required to fill out a property disclosure.

They are selling "as-is".

During due diligence a buyer has their "right to their own inquiry".Meaning if they want to spend the money to satisfy whatever report or inspection they want they can go ahead.

If a listing agent only has one picture the inside is usually trashed or the agent is just lazy with the pictures.

I like to give a overview of condition but say "information deemed reliable but not guaranteed".

There is simply no way for a broker/agent to know all problems associated with a property.With my listings I want to be 100% transparent with the numbers and the condition I see.

It makes no sense to blow smoke and then pray the buyer will overlook things.What happens is everyone's time is wasted and the buyer cancels the contract.You look bad to your seller and the buyer and have now lost 2 clients for future business.

So give the information you know and be accurate as much as you can with the data.
Podcast Guest on Show #47
NNN Invest53 Reviews
Website View Page
3 Reply
Marc Freislinger
Flipper · Phoenix, AZ · Member since 2009 · 973 posts · 679 votes
15y
I'm a bit torn on this one Josh. This is similar to the question asked by wholesalers about how to estimate repairs. I got a wholesale lead a couple weeks ago where the repair estimate was $15k. I walked the place, and would be putting about $100k into it to get the sales price they claimed $15k would pull. His problem was that he took his estimate from the owners. The home probably could have been made complete for $15k, but still would have been completely outdated, with no curb appeal.

Where do you draw the line with this stuff? I agree that agents should have some knowledge of the properties they sell. They should know if the plumbing doesn't work, the electric doesn't work, the walls are missing, or the roof is shot. I believe the NAR requires that an agent disclose these defects even if their seller requests them not to.

The problem then is that all of these could be in decent shape, and the home still require a lot of work. The layout could be ****, the cabinets could be hideous, etc. Should the agents have to tell the buyer that everything is outdated and worn out? Even then, every buyer will have their own idea of what needs to be done. I've seen cabinets painted that I would tear out, or carpets cleaned that I would replace. I may even replace windows that don't leak or a roof that has an ugly color.

In my mind, the agent should know if the mechanicals work, as well as the roof/windows/etc. I do not think they are responsible for a complete list of work that needs to be done to a property. Any investor who is relying on someone elses scope-of-work is asking for trouble.
2 Reply
Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
IMHO agents are salespeople selling houses. They're not contractors nor inspectors. They might be able to point out obvious problems and might give ballpark figures as to costs, but that's not their responsibility.
4 Reply
Joshua D.Pro Member
OP
BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
15y
Marc - That's my line of thinking. I'm not saying that agents need to be able to give estimates, but they should know the general condition of the property.
Podcast Guest on Show #100
1 Reply
Loc R.
Note Investor · Pasadena, CA · Member since 2009 · 849 posts · 544 votes
15y
I'd like to think that anytime you're selling anything, the more information you provide, the better the buyer feels about making a decision.

With that logic, if I'm an agent trying to sell a MAJOR purchase, I should probably provide as much information as possible.
1 Reply
Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
I don't think it is the listing agent's "job" either, but it would certainly be helpful for them to supply more information. I wouldn't trust the agent's assessment of repairs any more than I would trust their pro formas for selling apartment complexes....call me cynical I guess.

We had a lengthy thread about the value of agents several months ago. I think the thread above demonstrates how much value they generally add when listing property.
0 Reply
Joshua D.Pro Member
OP
BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
15y
Sounds like the consensus from the investor crowd is that agents should facilitate transactions and get out of the way....

What about the regular Joe who isn't sophisticated? Who does he turn to when it isn't the agent's job to provide these details for him?
Podcast Guest on Show #100
0 Reply
Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
Regular Joe uses an inspector as the normal part of the buying process. I think the system works just fine...and the agents should stick to working with Regular Joe given their lack of accountability and laziness.
0 Reply
Mitch Kronowit
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
Originally posted by Marc Freislinger:
In my mind, the agent should know if the mechanicals work, as well as the roof/windows/etc. I do not think they are responsible for a complete list of work that needs to be done to a property. Any investor who is relying on someone elses scope-of-work is asking for trouble.

I agree. Some real estate agents I know have a great deal of experience with home repair and construction, having worked as or for a contractor in the past, or are active investors. Then there are some that couldn't tell the difference between a 3" box nail and a 3" deck screw. Of course, their job is to show and sell the home, not build one. However, they should be able to at least give you an idea of it's general condition and any specifics they're aware of.

I'm interested in the biggies, i.e., are any windows broken/missing, are any appliances included (working or not), does the place appear vandalized, has any landscaping survived, holes in the walls or roof, what type of flooring and it's condition, etc.? I don't ask about paint since I assume it'll need some. If they seem to have a fair grasp of the items above, I'll ask more, such as the status of the plumbing, electrical, and HVAC and see what they can tell me. If nothing, because they haven't been trained or never got a pre-sale inspection, I'll let it go.
0 Reply
Loc R.
Note Investor · Pasadena, CA · Member since 2009 · 849 posts · 544 votes
15y
To add to Bryan's comments, at this point in my life I unfortunately have the utmost lowest expectations for anyone anywhere.

So, when you find a good one, keep that relationship!
0 Reply
Mark Brian
Involved In Real Estate · Anderson, SC · Member since 2008 · 350 posts · 70 votes
15y
As a LISTING agent, I will tell you what I know or has been disclosed as material fact to me. And I will add the caveat that for your protection I strongly suggest you inspect the property yourself and determine which qualified professionals a buyer should use to help them determine the condition.

It is not that I am lazy or have a lack of accountability. It is that I am an real estate agent not a contractor, inspector, structural engineer etc etc. I will not be put into a position of liability or held accountable because a buyer will not perform their own due diligence.

Working as a BUYERS AGENT, I will tear the property a new one but still give you the same caveat.
0 Reply
Mark H.
SFR Investor · Phoenix, AZ · Member since 2009 · 484 posts · 181 votes
15y
I don't think it's the agent's responsibility to point out repairs - as soon as an agent makes a "list of repairs", someone is going to sue because something was left off. Agents aren't home inspectors or contractors.

I do wish more of them would mention in the listing that there's a major issue (that isn't obvious from the pictures) if they know about it - i.e., "stinks like cat pee"... "missing hvac", etc... that's only fair.

But if you're in a $200k market and a property is listed for $25k, asking an agent for a list of repairs is pretty silly. You're buying dirt, not a house at that price.
2 Reply
Mitch Kronowit
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
Originally posted by Mark H.:
I don't think it's the agent's responsibility to point out repairs - as soon as an agent makes a "list of repairs", someone is going to sue because something was left off. Agents aren't home inspectors or contractors.

I agree, but I don't think anybody is asking the listing agent to perform a house inspection for them, just provide a good idea of what they're dealing with so they can decide if they want to move forward or not.

To the untrained eye, a missing dishwasher may seem about the same as a missing A/C condenser (after all they're about the same size, right?). But we know better, like a 12" hole in the wall is less serious than a 3" hole in a window, a garbage disposal that doesn't run is much better than a furnace fan that doesn't.

This is one reason I like to shop nearby our home so I can view property myself. If you're simply going to buy something clear across the country, sight unseen, you better have somebody out there you trust, with the knowledge and experience you need to properly evaluate the property, and the listing agent isn't that person.
2 Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
15y
It's like actually providing a service to a customer has gone completely out the window. It may not be her responsibility to know, but wouldn't it be great if she did know. If she had walked through the property and could provide a quick list of some major things. Or better yet, if she responded to Josh that she could assist him in getting that information. That's probably a different topic, but I am looking at from strictly a service perspective and not fiduciary perspective.

Podcast Guest on Show #224
REI Nation4.576 Reviews
Website View Page
2 Reply
Ed Beck
Involved In Real Estate · Boonton, NJ · Member since 2008 · 39 posts · 15 votes
15y
As a listing agent for REO's, I better have an idea about condition...I'm completing a repair addendum ON THE BPO! I'm not a contractor, but I do have to list the repairs and come up with a number on the BPO. Also, if a buyer/investor calls on a property, I'm going to tell them every thing I know about the condition of the property, systems, oil tank, etc. because if that particular buyer isn't interested in doing that kind of work, than I won't be wasting my time running out and showing the property. I get calls all the time from people wanting to buy that REO for $30,000, and they think it is in move in condition. Obviously I'm going to explain that it needs...everything. It's a little part of the process called 'qualifying the buyer'. This person mentioned above is just plain rude, inexperienced, or whatever...
3 Reply
Joshua D.Pro Member
OP
BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
15y
Chris - In this day and age, service is out the window across industry. That's why places like Zappos stand out.
Podcast Guest on Show #100
0 Reply
Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
15y
Originally posted by Joshua Dorkin:
Chris - In this day and age, service is out the window across industry. That's why places like Zappos stand out.

It's off topic I know, but the book 'Delivering Happiness" by Tony Hsieh of Zappos should be required reading for anyone providing any service and we believe in that philosophy so much that our staff of 24 are visiting Zappos headquarters for their Customer Service tour this year. Half in August and the other half in October.

There is no substitute for treating people right and doing just a little extra.
Podcast Guest on Show #224
REI Nation4.576 Reviews
Website View Page
0 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
15y
Joshua,

Kudos for all your points, and originating the discussion.

I agree, service has been bound, gagged, and left in a road side dumpster for trans-national profit conglomeration. Sad part is, how much and easily people have greeted it. I myself, must seem to be the "nightmare" customer, I expect that age old adage of "being treated like a customer", and greatfully pay a value price for it.

I expect the same from my realtors, although your experience in the O.P. is the rule for what I too encounter, although I do not find it acceptable.

A r.e. agent is in place and employed to be there customers agent, just like a lawyer. Could you imagine hiring a lawyer, and having them only tell you bits and pieces of important information on a case. And similarly, the opposing lawyer is all but expected to withhold information (other agent).

Responses and service such as you brought to light exist for 1 reason alone, we the customers allow it to be so. Customers raise there standard of expectation, agents raise service performance.

I personally do not wast any time dealing with an agent once i encounter a response such as that. Experience has told me, I need an expert in there dragging out full info because what i don't know would hurt me.
1 Reply
Peter Seely
Select a State · Member since 2011 · 90 posts · 3 votes
15y
Hi,

I am finding this discussion very interesting considering I am in a situation now where my agent (who has been great)found a property that I liked (Fannie Mae) after my due diligence/research I put in an offer because I like location and thought the home was a steal(I have not seen it yet). Then after offer was accepted I then am told about HVAC missing, water heater missing approx $5000 in repairs are needed. The bank does not disclose this prior. I also ended up bidding higher then listed price due to multiple offers. Would I have bid as I high had I known this prior...NOT A CHANCE I have yet to send my earnest money...due tomorrow and not sure I should and go through with inspection since the inspector will not have water....how can an inspection be done properly without this?

So my two cents: Had this information been disclosed (not at all blaming my agent as I believe the bank did not disclose this to her until they accepted the offer)a lot of time could have been saved by all parties involved and I would have offered less then I did due to the needed repairs. One way another this would have been discovered as most smart buyers will get a property inspector and see the property while they can. I am going to be there within that 10 day due diligence period.

The question is: Should I pull out knowing before the inspection I am looking at approx $5000 in repairs and the inspector wont have running water while inspecting the property?
0 Reply
Craig E.
Investor · Sacramento, CA · Member since 2011 · 87 posts · 56 votes
15y
In CA an agent must perform "a reasonable inspection" and disclose all known “material facts" to the parties. The standard is that of a reasonable agent given their knowledge and experience under same or similar circumstances and a ‘knew or should have known’ standard. A "material fact" involves health, safety or welfare, or is a fact that would naturally affect the buyer's decision making process. An agent's failure to perform a reasonable inspection and/or failure to disclose all known material facts to the parties is a breach of duty based on the above standard of care. If the agent’s act or failure to act causes injury to a party (or a foreseeable 3rd party) the agent could be exposed to civil suit (and even criminal charges) including punitive damages and discipline by the DRE.
1 Reply
Mitch Kronowit
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
Originally posted by Craig E.:
... including punitive damages and discipline by the DRE.

Does that involve paddling in a candlelit dungeon by nondescript functionaries hooded in Trappist monk robes? :mrgreen:

Sorry, feeling rather cheeky tonight. :wink:
0 Reply
Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
15y
Josh,

I can tell you that most agents do not have a clue what is needed for repairs. Sometimes we will get an agent who will call us up and tell us they have a home for us and it needs not repairs, move in ready!! I go and check it out and it needs about $8,000 in repairs. This just happened today actually. Todays agents, the ones who get foreclosure listings are actually the laziest ones, I mean that with all good intentions. They know that when they get a home the wholesaler will go look at it for them. This is our reality.
Curt Davis - KAIZEN Realty538 Reviews
Website View Page
0 Reply
James Hiddle
Altus, OK · Member since 2008 · 2k+ posts · 690 votes
15y
I wouldn't trust an agent with any type of repair estimate whether it's in depth or simple.

1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.