Selling a house is not for the faint hearted. Attorney Robert N. Bass was the Administrative Law Judge for the Arizona Department of Real Estate for over five years; he heard and decided hundreds of complaint cases involving residential real estate transactions. Mr. Bass is a nationally-known lecturer and author on the subject of risk reduction in real estate transactions. He is a member of the AMERICA ONLINE Board of Real Estate Advisors, and a consultant to this forum. His E-mail address is RNBESQUIRE@aol.com. Mr. Bass concentrates his law practice in defending claims involving real estate transactions.
The subject matter discussed in this article is of a general nature. It may be considered legal advice. While the author is a licensed attorney in Arizona, he is not YOUR attorney, and the laws in each state can vary greatly. Therefore, you should consult experienced legal counsel in your area before taking any legally significant actions which may affect your legal rights.
When Larry and Beth decided that the time had come to sell their home, they asked themselves: "Why do we need a real estate agent? After all, an agent will charge thousands of dollars to sell even an average home, and that commission comes right off the top. Heck, we can do practically everything an agent would do, so why should we pay out all that money?" Many home sellers have similar thoughts, and because so much money is at stake, these questions deserve some serious thought.
Any real estate agent can give you an impressive list of reasons why it makes sense to hire a professional to help you sell your home, and from a marketing perspective, there are indeed many benefits in doing so. An experienced agent can utilize any number of marketing opportunities and strategies that the typical "For Sale by Owner" (a.k.a. "FSBO") does not even know about. For example, only a professional agent can take advantage of the Multiple Listing Service, organized tours, etc. However, there is another reason to seek professional help in selling your home; an important reason that you may not have thought about.
In today´s world, the sale of real property is not just a marketing exercise; there are many legal issues involved, which can create liability in the sellers. Of all the things you want and expect from selling your home, a lawsuit is probably not one of them!
Unfortunately, residential transactions have seen an alarming increase in the number of claims and lawsuits. Of these claims, the majority are filed against the sellers, by their buyers. Home sellers who think they can "go it alone" might want to seriously ponder the observations of a lawyer who has defended many sellers and real estate agents against claims made by "the Buyer from Hell."
In most states, the process by which title to real property is transferred is rather complicated, and the typical home seller is not familiar with the many legal issues that can and do arise, even in a fairly simple transaction. Important decisions must be made concerning contract terms, escrow matters, transfer of title, apportionment of costs and any number of other matters. Also, bear in mind that a simple missing word, or a mistake in the grammar can create a dispute which, in turn, can give rise to a lawsuit. Aside from the problem of drafting the contract language itself, sellers can face other dangers as well. For example, did you know:
...that in most states, there are substantial risks involved when a sellers agrees to "carry back" a note from the buyer; risks than can cost you thousands of dollars?
...that your good credit rating could be ruined by your buyer´s default, many months, or even years, after the buyer "assumes" your loan?
...that a clever buyer may be able to stay in possession of your property for many months after he defaults on the contract, and in effect "live for free" at your expense?
...that most buyer complaints involve alleged damages of less then $10,000, yet it can cost you thousands in attorney´s fees to defend such a claim?
In short, a lawsuit can ruin your whole day. Even if you know the buyer´s claims are completely bogus, it can take many months and many thousands of dollars to prove that you are "innocent." What´s worse, you have no "malpractice" insurance to pay these legal bills; you will have to write all those checks yourself. And, of course, you could lose ... and losing a case like this can be disastrous. You and the buyer have a contractual relationship, and in many states, sellers who lose such suits could find themselves having to pay not only the amount of the damages awarded to the buyer, as well as their own attorney´s fees, but they may also be ordered to pay the fees of the attorney who sued them!
Experienced, professional real estate agents understand these kinds of risks, and they can help you to minimize them in a variety of ways. They devote many hours to training and educational programs which emphasize risk reduction, and protecting their client´s interests.
There are any number of reasons why your buyer may decide to take action against you (sometimes, they just don´t feel like making the payments any more!). However, most of these complaints allege problems relating to the condition of the property, and/or alleged representations made to them about the property or the transaction. An experienced agent knows how to reduce the risk of these types of complaints, by including, or suggesting that your attorney include, effective "AS IS" and other clauses in the contract language, and by providing for such things as a professional home inspection, and a home warranty.
When a problem arises in the transaction, an experienced agent can move swiftly to "nip it in the bud". Their thorough understanding of the myriad facets of modern transactions can help them to identify the real problem, and then to either solve it themselves, or seek help calling upon resources that the typical seller simply does not have access to.
There is no escaping it; the best way to deal with a complaint is to prevent it in the first place. The organized real estate community has spent a lot of time thinking about how to reduce the likelihood of claims, and has responded to this threat in a number of ways. For example, the standard contract forms that agents in many states use, are chock full of language which can help protect you, and reduce your exposure to claims and litigation. If you are in a state in which real estate transactions are handled by attorneys, many of the problems discussed herein will be minimized, but a top-flight agent can still play a major role in helping your sale move toward a smooth closing.
I´ve only touched on a few potential pitfalls of selling your home on your own. Take this from someone who knows: selling your home without professional help is very risky business indeed. Yes, it costs money to employ a real estate agent, but if you find the right one, you will likely be able to sell your property faster, while at the same time reducing the chances that your buyer will come back to haunt you.