Who should pay for this mistake?

10 Replies

Hello BP Community, 

I've been out of the country and had a short sale purchase approved before I left. I've just gotten back and am ready to close. My realtor informed me that I had to have a survey that she ordered and it was $475. I noticed on the HUD-1 that no survey was noted. When I asked the title company and credit union what the deal is, they said no survey was required as they already had one. My realtor claims the title company said they didn't have one, so she was being proactive and ordered it to expedite the process. The title company then told her they had one, but weren't sure it would be usable. She didn't cancel the new survey. Now I am being asked to pay $475 for a survey wasn't needed. Who should pay for this mistake? Thanks.

From what you say in your post, definitely her.  I dont let other people spend money out of my wallet without asking me first.  How big of a purchase is this?  My agent made an offer a few months ago $1k off what I told her to and ate it.  She'd never order an appraisal or survey or anything else that expensive without checking first.  That's just not her job.  I could possibly see the mortgage broker ordering it and billing you, but not the realtor.

Up to you and your relationship, might split it or something just to be nice.  But someone ordering something I don't want or need without asking me first and then handing me the bill doesn't fly. 

@Darrell Shepherd This is a $70k house, so it's not a huge purchase. I thought the survey would be ordered by the mortgage broker, if needed, and then put on the HUD-1, sure... but this really blindsided me. Thanks for your input.

Were you accessible while being out of the country?? You should while a deal is in process to close.

Many buyers think you put something under contract and then it just closes. The reality is once you get something under contract that is when the really intensive work begins. It takes time and commitment to close and even after words there are post closing items sometimes that need to be addressed.

Sounds like someone said an existing survey may or may not be usable. If the new survey wasn't ordered and existing wasn't acceptable then the short sale could have fallen through for not closing in time.

The issue I see is could the broker/agent reach out to you while you were out of the country to get guidance or were you unreachable?? If you were not reachable or chose not to be until you got back then some of the blame would fall on you. In that situation you put the broker/agent in a no win situation.

I have clients that travel all over the world that invest in commercial real estate that live in the U.S. E-mail, phone, Skype still works overseas. Time zones are different and modes of communication are more sporadic but connection is generally possible. If you were going to be in a really remote area out of the country with no communication for an extended period of time then you should have had a limited POA to make your decisions here or waited until it closed first.

The broker/agent should have gotten something in writing or a communication trail saying it was needed. You might be able to negotiate with the survey company for a reduction after explaining what happened.

No legal advice given.  

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

@Joel Owens

 Thank you for your thoughts. I was in contact for sure and check my email many times each day. In our digital world, my being out of the country should not have come into play. I do understand that these situations can become very complicated and that's why I try to work with the best people I can find. I try not to micromanage and let each party do their respective job. 

A broker/ agent shouldn't make decisions for the client. You know what happens when people ASSUME things............ : )

The broker/agent should ask questions and get written response from the client on how to proceed.

If the buyer can't make a decision it is on them if the deal goes bad. It's the buyers money and deal so they have to make the tough calls and live with the consequences. Inaction also has repercussions and does not make problems go away generally.

It's hard to get a good broker/agent doing a 70k deal. Most of them are part-timers.

I let everyone do their job on my transactions but I stay on top off all the details for my clients. People do not mess up on purpose but things can fall through the cracks if someone isn't watching. My deals however are larger in nature 5, 10 million etc. where ultimate professionalism is expected.

At this point the survey company provided a service. Maybe you can negotiate it down from 475 and request that your broker/agent pick up the rest or split it with title if they messed up etc.

No legal advice given.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

At almost $500.00, on a 70k house, I think it needs to come out of the realtors pocket.

You did not approve of the survey, and you were not aware of the circumstances. She made a judgment call, and it was a bad one, so she needs to chalk it up as a learning experience and pay the monies.

Good luck 

Is there a paper trail? Was any of this done over email that the agent or title company could show? If so, that would answer that question. But if there's no evidence the agent asked the title company about it and she didn't ask you either, I think she should pay it. Maybe you could split it with her as an act of good faith. 

Medium apartment logoAndrew Syrios, Stewardship Investments | http://www.StewardshipProperties.com | Podcast Guest on Show #121

You can certainly make the agent pay for it......but, either expect them to no longer be proactive in an effort to help you, or have fun with your new, non proactive agent.  Never saw a title co. not use am urgent survey though.

Thanks for the insight, everyone. I'm going to check and see if there's a paper trail. Another thing that I think it's important to remember is that although on the surface it may appear to just be a $70k house, many people on Bigger Pockets buy multiple homes in this price range per year and also need someone to list and sell them at some point. Others need management as well... so while it may look like a smallish deal, and it is, there is often much more business/commission/referral money involved than a simple one-off transaction. 

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