I messed up. Gave PoA to agent for closing

Buying & Selling Real Estate
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I messed up. Gave PoA to agent for closing

Christopher Morin
Flipper/Rehabber · San Francisco · Member since 2014 · 124 posts · 49 votes

Rant/advice please. .. so I closed on the final sale of a flip on friday, and in my attempt to outsource and spend less time "in my business" and more time "on my buisness" I signed a specific PoA over to my listing agent... I allowed them to sign addendums to my contact during closing negotiations, and also conduct closing. Well, absent specific instructions, they moved up closing to as soon as possible (good) and signed without presenting me the settlement statement ( very bad).

Turns out they messed up an addendum's verbage, and increased my closing cost concessions by 3000 more, when it was supposed to decrease by 1500. It was a contract verbage issue that the title company simply executed. And then my agent signed the HUD on friday.. that's 4500 I shouldn't have paid.

My fault entirely for misplaced trust and unclear instructions, but this was a significant error by my realtor. Should I ask them to concede part of their commission? Or simply note lessons learned and fire them?

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y

@Christopher Morin This seems to me then like a clear mistake by the agent....not so much in the signing using the POA process, but rather in the contract negotiation process. When I renegotiate things and put the final information on an addendum, I always put language to the effect that states the final sales price, the final and only credits and what they are for so there is no confusion. e.g. "The final sales price will be $405,400. An $1,800 seller subsidy will be provided for closing costs and this will be the only credit and/or subsidy provided."

In light of that I would discuss with the agent , and see if they would be willing to reimburse you some of the costs. I would also talk with the title company and see if they would as well.

@Richard Dunlop suggested the possibly of filing an e&o claim...however I think that would likely be a waste of time in this instance because you gave the agent POA.

As an agent, I have had out of state clients ask to give me POA and I have always said no. I have them designate a local friend or family member to have their POA. I think my liability runs too high signing for a principal where I am the agent in the transaction.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    First of all, that's not one of the things you should be delegating.   Did the agent understand what they were doing?  Did your agent consult with you at all on the "language change"?  Exactly, what language changed your net by $4500, and how were you completely unaware of it?

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  • Eric Trostle
    Real Estate Consultant · Ogden, UT · Member since 2015 · 52 posts · 26 votes
    10y
    I'm newer to this(so I'd first consult with an attorney before confronting him) but I thought PoA gave someone the right to sign your name, not make executive decisions without your consent. Rather that's right or wrong it sounds to me that your agent didn't perform his fiduciary duty by allowing you to pay more than originally agreed(which could be another issue). In short, I'd check with an attorney and then go talk with him or follow your attorneys advice. Hopefully your agent will see the value in maintaining your business relationship and will help you out.
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  • Christopher Morin
    OP
    Flipper/Rehabber · San Francisco · Member since 2014 · 124 posts · 49 votes
    10y

    In my opinion, closing on my behalf is definitely within the realm of delegation... approval of the HUD is not. The roles were not clearly defined on what the left and right limits are, which is my mistake, and won't happen again.

    As far as the verbage, it was the title company poorly interpreting an addendum.  We had a low appraisal, and lowering my closing costs concessions to make up for it.  I saw all copies of the contract changes before I gave specific direction to sign them.

    If the HUD was reviewed, the mistake would have been caught and we would have fixed it. There is clear recorded communication between the agent and I on all conttact addendum changes. It was not unclear what was "supposed" to happen by any party, including the buyer.

    I think I agree that the realtor did not perform fiduciary responsibility, but this is a grey area.  I think suing for recovery may be possible, but not my first option here.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    Is there a way you can put here the language  used in the addendum? I just think a lot of us are having a hard time how -$1500 can be interpreted as +$3,000.

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  • Christopher Morin
    OP
    Flipper/Rehabber · San Francisco · Member since 2014 · 124 posts · 49 votes
    10y

    Sure.

      Original contract I had conceded to 4500 in costing costs.  My agent did this via a "closing costs addendum" that specified exactly what items I would pay, which totaled 4500.  

      The appraisal came in 3000 lower than sales price.  We renegotiated with the buyer, and decided that we would meet halfway on the difference.  We did this via an addendum that stated "seller to contribute 3000 toward closing costs" intending to overwrite the previous closing costs addendum of 4500.  The title company saw this as pay 3000 more, in addition to the original 4500.   

     So I paid close to 7500, instead of 4000.

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  • Christopher Morin
    OP
    Flipper/Rehabber · San Francisco · Member since 2014 · 124 posts · 49 votes
    10y
    Originally posted by @Christopher Morin:

    Sure.

      Original contract I had conceded to 4500 in costing costs.  My agent did this via a "closing costs addendum" that specified exactly what items I would pay, which totaled 4500.  

      The appraisal came in 3000 lower than sales price.  We renegotiated with the buyer, and decided that we would meet halfway on the difference.  We did this via an addendum that stated "seller to contribute 3000 toward closing costs" intending to overwrite the previous closing costs addendum of 4500.  The title company saw this as pay 3000 more, in addition to the original 4500.   

     So I paid close to 7500, instead of 3000.

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  • Richard Dunlop
    Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
    10y

    E&O insurance

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    @Christopher Morin This seems to me then like a clear mistake by the agent....not so much in the signing using the POA process, but rather in the contract negotiation process. When I renegotiate things and put the final information on an addendum, I always put language to the effect that states the final sales price, the final and only credits and what they are for so there is no confusion. e.g. "The final sales price will be $405,400. An $1,800 seller subsidy will be provided for closing costs and this will be the only credit and/or subsidy provided."

    In light of that I would discuss with the agent , and see if they would be willing to reimburse you some of the costs. I would also talk with the title company and see if they would as well.

    @Richard Dunlop suggested the possibly of filing an e&o claim...however I think that would likely be a waste of time in this instance because you gave the agent POA.

    As an agent, I have had out of state clients ask to give me POA and I have always said no. I have them designate a local friend or family member to have their POA. I think my liability runs too high signing for a principal where I am the agent in the transaction.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    1Reply
  • Richard Dunlop
    Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
    10y
    Originally posted by @Russell Brazil:

    @Christopher Morin This seems to me then like a clear mistake by the agent....not so much in the signing using the POA process...

    @Richard Dunlop suggested the possibly of filing an e&o claim...however I think that would likely be a waste of time in this instance because you gave the agent POA.

    As an agent, I have had out of state clients ask to give me POA and I have always said no. I have them designate a local friend or family member to have their POA. I think my liability runs too high signing for a principal where I am the agent in the transaction.

    The POA makes the signature valid but does not allow the agent to act contrary to specific instructions.

    As you state in the next paragraph your liability is too high so you refuse to be AIF. It probably boils down to are the instructions documented (email or Text) or does the agent admit he made a mistake or is he going to state that he signed the change that he thought the seller had agreed to.

    My opinion is the amount is relatively small the broker would probably pay it to avoid filing a claim or losing a client.

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