Real estate agents are at the center of every deal, causing them to face unavoidable challenges. It’s taxing enough to satisfy brokers, lenders, other agents, appraisers, and clients who demand time and expect proficiency. So, it’s an intelligent self-preservation tactic to steer clear of nightmare buyers.

Sometimes, clients can be challenging and demanding, but nightmare buyers are different. They don’t listen or follow directions. They are impulsive, can be reckless, and often quickly blame others for their messes.

The Claim

An agent picks up a first-time homebuyer on a referral from another agent in the same market, which should always be a red flag in competitive commission sales situations. Undaunted, the new agent took on the buyer only to find her the classic nightmare buyer. The agent soon discovered that the client constantly changed her mind and demanded an untenable always-on communication with her.

In this case, the buyer entered a purchase contract contingent on an inspection, including a chimney inspection. The buyers had unrealistic expectations and made unreasonable demands from her real estate agent, including the timing to get the chimney inspection done.

The buyer climbed onto the house’s roof without permission in frustration and did an unapproved, unprofessional, and potentially dangerous inspection. She was fortunate that the sellers declined to press charges. Next, the buyer wrote a chimney inspection addendum requesting a $25,000 credit added to her initial home offer, which the sellers declined.

The sellers had better backup offers and created their addendum, which they signed and submitted to the agent. The buyer’s agent had to rescind the offer, but the buyer failed to sign the termination clause that would have protected her $2,500 earnest money. As a result, the buyer actively seeks a $2,500 refund of her earnest money.

What Went Wrong

The new buyer’s agent missed the warning signals or chose to ignore them. While it’s a hard choice to pass on new clients when one works on commission, the lesson learned is to use one’s intuition and experience when taking on new clients – especially on referrals from other agents. It’s always worth it to take the time to understand the motivation of the referring agent.

No matter how tempting, it’s not worth contracting with every client without vetting them first. Because some clients are too complicated and untrustworthy, they can cause cascading problems. Therefore, you must respect your time and be selective about taking on new clients.

Real estate is a people business, and as such, it’s imperative to get to know who you represent. It’s always a mistake to be in a rush and not take the time to size up potential new clients so you can make good decisions about working with them.

Liability is part of every profession, but you can minimize it. Stay alert for potential problem clients and be ready to vet them before agreeing to represent them in a deal. Train yourself to step back and ask what is going on with people and transactions when caution flags are waving. Your desirable clients will appreciate your thoroughness, and you’ll benefit by avoiding extremely difficult clients.

You’re right if you think of Professional Liability insurance as protection to defend against lawsuits and compensate for losses due to errors and omissions, which is our dependable after-the-incident support. However, our job as real estate E&O insurance experts goes beyond protection as we seek to educate and inform our clients on the best practices to operate without ever needing to make a claim. It’s the smoothest and lowest-cost way to manage your real estate business.

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