A heated real estate market can cause agents and buyers to be careless and reckless. Often buyers feel like they need to remove purchase contingencies to make their offer more competitive. Removing a house inspection contingency is very risky especially if the buyer is not willing to verify the listing information. Here’s an example of what can happen when simple mistakes are made when listing a property.
The Claim
The buyers purchased a home offered through a listing broker who made certain representations regarding the property’s condition on the MLS. The listing falsely indicated the property had central air conditioning. However, since the AC unit was represented and expected, the buyers now demand the agent pay $10,000 to install central air in the unit. The buyers trusted the realtor to be accurate and honest in her description of the property
What Went Wrong
When real estate professionals make false assumptions because they don’t do proper due diligence or make other innocent mistakes, they risk lawsuits for their negligence.
Like this situation, many are avoidable if the involved parties had done a thorough job of vetting the MLS listing claims and inspecting the property. The agent should have noticed the house lacked central air because it’s hard to miss an AC compressor/unit and other outdoor equipment. The buyer should have performed an inspection to assess the condition of the home and related systems.
Presumably, since the buyers waived the housing inspection contingency they did not hire a professional inspector but they still could have performed an inspection for informational purposes only. At the very least, they should have done a personal examination to find defects and ensure major systems such as the HVAC unit worked satisfactorily.
No one is always perfect, and even when they are, they can still be sued by clients seeking compensation for losses. This story is an example of why real estate professionals need the protection that only an Errors and Omissions (E&O) policy with broad coverage provides. It’s agents’ first line of defense against potentially ruinous lawsuits in today’s increasingly litigious environment.
Are you interested in PBI Group generating an E&O insurance quote for your real estate agency? Click here.
