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A LISTING AGENT'S $$$$ DOLLAR MISTAKE

By
Real Estate Broker/Owner with Beam & Branch Realty TREC #547752

A LISTING AGENT'S $$$$ DOLLAR MISTAKE

A few months ago I posted about a transaction that I was working on called "An Expensive Mistake".  The listing agent on the home my buyer purchased took care of the home repairs for the Sellers.  This agent hired the contractors personally and paid them out of their own pocket.  The invoices were made to this agent.

A long story short, the listing agent useWiresd non-licensed handy men to repair several electrical issues.  The Buyers were not pleased.  The buyers insisted that these electrical issues be repaired by a licensed contractor of which was arranged.  Shortly after moving in and commencing to use the range and vent hood (one of the items repaired), an electrical fire broke out.  Luckily they were able to put the fire out. 

The fire department discovered that hidden behind the vent hood were several EXPOSED wires which caused the fire!  Their comment was that someone tried to splice them together.  Because this botched job was hidden, it would not have been discovered until disaster struck!

The email threads were copied, the invoices copied and off I went to visit the Listing Agent's Broker.  I was very pleased with the way the listing broker handled this.  Once they saw the emails, the invoices made out to the agent, they knew who was at fault and assured me that this agent would be paying to correct this issue and pay for any damages.

The vent hood now must be completely replaced and is one of those high-end vent hoods.  The entire ordeal will cost this agent thousands of dollars which could have been completely avoided by the listing agent doing things very differently.  Always have the Seller's arrange and pay the sub-contractors. 

 

Buyer's, you should INSIST on licensed contractors to do repairs such as electrical, plumbing or other mechanical or structural repairs!  This incident could have ended in disaster!  It is never worth it to skimp on quality!

An expensive lesson learned! 

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Comments (123)

Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

And to think - she probably did that so a handyman friend could earn a few extra dollars.

May 09, 2012 03:29 AM
Glenn Ferguson
Bahamas Luxury Real Estate - Gainesville, GA
Only The Sun Covers The Bahamas Better

Greay advice Paula and thanks for sharing. All real estate agents should use this case to recommit themselves to ensuring that they act professionally and responsible at all times. A clear case of penny wise and pound foolish..  

May 09, 2012 04:17 AM
Kathy Schowe
California Lifestyle Realty - La Quinta, CA
La Quinta, California 760-333-8886

I always have the client choose the licensed contractor... I give them several choices.  If you take on that responsibility you are asking for trouble!  Kathy

May 09, 2012 04:26 AM
Mike West
Heritage Oak Properties - El Dorado Hills, CA
El Dorado Hills, CA CDPE, CNE, Licensed Loan Origi

It is unfortunate that a there are some agents who think that just because they passed the licensing test that they know better.  The individual you describe was very lucky.  The damage could have been more extensive and some could have been injured or killed! 

May 09, 2012 05:06 AM
Kerry Jenkins
Prime Properties - Crestline, CA

She could be so liable for so much more!! WOW

May 09, 2012 05:50 AM
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By Real - Alexandria, VA
Alexandria Virginia Homes For Sale

Paula- What a tough lesson to learn although, I can't imagine not using someone licensed to make repairs.

May 09, 2012 05:54 AM
Angela Penkin
RE/MAX Plus - Rochester, NY

Very good lesson learned. I have made a payment or two for a seller at the last minute - won't do that again.

A misconception, at least in my area is that people should use a licensed electrician - as recommended on most inspection reports. However, my electrician (licensed) informed me that they are Licensed by the City of Rochester and that covers their work in the city boundaries. It does not mean they are licensed to do work in the surrounding towns. The surrounding towns do not have (in our area) their own "license" that is issued. He said within the towns, anyone may do the work - however it should always be inspected by an underwriter. That is what the real requirement is, or should be. So the day he replaced a panel box, riser, moved the meter, etc in a listing of mine in the outlying town of Pittsford, the underwriter was there while the work was done so that he could inspect and approve it.

He said we throw the term licensed electrician around way too freely.

PS I referred him to the out of state seller of the house, and they did their buisness by email. Estimate, approval, billing and they paid him directly.

May 09, 2012 06:19 AM
Jacque Weems
Russ Lyon Sotheby's International Realty - Sedona, AZ

Paula,

Electrical, plumbing and roof are not areas to invite "handymen" only licensed contractors.  I found myself in a tight spot some years ago when a roof repair was not properly completed.  The roofing company, hired by the sellers, sent a crew from 90 miles away and they never returned to complete the job even though they submitted the invoice and was paid by escrow.  I would never get on a ladder to check a roof repair and probably wouldn't know if it was improperly done if I were looking at a problem but we should have hired the home inspector to double check the agreed upon repairs, something I have done since this incident.  Well, as you might assume, a few months after closing came the first big rain storm and water caved in the ceiling below the partially finished repair.  Lesson learned. 

May 09, 2012 06:22 AM
Katherine Braden
Oahu Real Estate Online LLC - Kailua, HI
R PB ePRO ABR AHWD SFR

In Hawaii, an agent using or suggesting use of non-licenced personell where a licenced electrician, plumber, or other are required is grounds for a large fine and/or up to loss of your real estate license.

May 09, 2012 06:44 AM
Karen Crowson
Coldwell Banker Residential Brokerage - Rancho Bernardo, CA
Your Agent for Change

Thank God no one was hurt.  This may have been a hard lesson for the agent, but it could have been much worse.

May 09, 2012 08:19 AM
Don Kanare
RE/MAX NORTH LAKE - Incline Village, NV - Incline Village, NV
Incline Village Real Estate

In our contracts here in Incline Village, a budget for repairs is stipulated. Many times, the buyer selects who will actually perform the repairs and any costs in excess of the agreed-upon budget in the contract are simply paid by the buyer during the escrow closing process. This way, the buyer can be assured that the repairs are being done by a service provider they trust, not someone who the seller uses that could cut corners to save costs for the seller.

 

I also have a clause in my addendum for purchase agreements that prohibits the seller from personally making any repairs. Repairs must be done by a licensed individual so the owner of the property can't do a marginal job and get away with it.

May 09, 2012 08:58 AM
Debra Chiarello
Retired
Deb Chiarello

Foolish decision on the part of the listing agent that ended up being a very costly lesson.  Can you imagine if that fire had been worse?  Oh my, don't even want to think about what the consequences could have been!

May 09, 2012 11:05 AM
Barbara Le Pine
ADVANTAGE REAL ESTATE, serving Lincoln County - Newport, OR
Your agent for the Central Oregon Coast!

I do the same as Don, #116 above, when I write an addendum for repairs, I am specific about who does them and what materials are to be used, for example, using stainless steel nails on a roof as we are on the coast where everything rusts. Even licensed contractors can get cheap, a buyer can insist the repairs be done by the contractor of buyers choice as they will ultimately be living with the results of the work performed. Great post.

May 09, 2012 11:10 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I know lots of handy men do work.  I would never reccomend it for Electrical.  I make introductions sometimes, but I never do the hiring.

May 09, 2012 01:48 PM
Risa Liebster
Ramsey-Shilling Associates - Los Angeles, CA
Toluca Lake Real Estate

Paula, I don't know what this agent was thinking using an unlicensed vendor for electrical. Thankfully, it didn't turn out to be a total disaster. A hard lesson to learn for everyone involved.

May 09, 2012 04:15 PM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Paula, great post and good warning out to buyers and the agent.

May 09, 2012 07:55 PM
Monique Ting
INET Realty Honolulu, HI - Honolulu, HI
Your agent under the sun

Paula thank you for sharing this story. In this case the $ saved by the agent came back to haunt him or her. Got lucky that the fire was minor... it could have been worse!

May 10, 2012 05:58 AM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Very dangerous taking on the the repairs. Let the owner hire their own contractors.

May 11, 2012 07:38 AM
S W
Centerville, KS

That could have been alot worse...not a smart move by that party!

May 14, 2012 12:30 AM
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

That agent and the handymen he hired should be very thankful the fire didn't destroy the home, and God-forbid cause the death of the owners.  That would have been a very scary time for that agent.  I had a closing in which my client, after I specifically told him the electrical issues MUST be done by a licensed electrician...and was VERY clear about it, he went ahead and did it himself.  His wife later told me she begged him to do what I said, and he basically told her to shut up.  The follow-up inspection revealed it was not done by a licensed electrician, and the buyers insisted on having a licensed electrician review the work, and approve it...and that the seller had to pay for it.  He agreed, and thankfully they were OK with the work, save for a few small changes.  Craziness.

Mar 05, 2013 02:10 AM