Seller Disclosures, Home Inspections & Difficult Negotiations: Lessons from a Real Transaction

Sander Scott, Realtor. So this video is really about the importance of seller disclosure statements and what liability there can be for sellers and filling those out. And it also talks about this terrible set of reviews from the same person, by the way, the buyer in this instance, left for me on Google. I really think that it's more of like no good deed goes unpunished. This, this reviewer who left me these two reviews never was my client, was represented by a different agent. But anyway, here's the story. So I was listing this home in, in the community of Northport. There was a bidding war going on between three parties, and then it got down to two. And so the, the winning bid, of course, had some contingencies, as, as most offers do. One of them, the contingency most important to this story, is the due diligence inspection period. So has the home professionally inspected, that contingency is satisfied. This buyer even signs a document acknowledging that the due diligence period has passed, he is satisfied with the inspections that he's received, and he's ready to proceed. And so then the— getting close to closing, I get a call from the buyer's agent representing this buyer saying that he can't make the pre-closing walkthrough, and would I do him the courtesy of opening the door and providing that for his client, which I was happy to do. So we went down and I opened the door and helped this buyer do his pre-closing walkthrough, and he even went into the crawl space during this time. I remember because I wasn't— I was not dressed to be able to go into a crawl space, so I wasn't going to go down there with him. But anyway, during that time, he was asking me about the community of Northport in general how he could get rid of this chicken coop that was on the property. I was talking to him about that, and, and then he mentioned the possibility of renting the home out on a weekly, a short-term rental basis, like a weekly rental basis. And we quickly discussed, um, you know, whether I might be interested in helping him manage that, be a property manager if he was going to use the newly purchased home for a short-term rental. We even talked about like plumbers and HVAC guys and that kind of thing, about who he would call when he needed help. And he had an immediate need because he wanted to shut off the valve for the water. So anyway, we had that discussion, the house closed. Over the next couple of months, I even plowed for him a couple of times. He called me, and of course I'm from Northport, I'm wanting to be warm and welcoming to the community and that sort of thing. I was happy to plow for him a few times. Because he hadn't got set up with someone else. I'm not in the plowing business, but I do plow my own property, my folks, my brother, and my father-in-law, etc. But, you know, a few months after the purchase, he calls me and he wanted to meet down at the New Bohemian in Northport and talk about the possibility of me being a property manager for him, that he seemed to have taken the consideration of short-term rentals more seriously and wanted to talk to me about the particulars of what that would look like. And so I met him down there. We started with some small talk, and then he kind of quickly mentions that the fact that he's changed his mind, he's not going to be pursuing short-term rentals, but, but now quickly shifts the conversation to the fact that he's found some defects with the property and he wants me to help him in seeking money damages from my client, who was the seller in this case. Damages of upwards of $35,000 from the seller. He says that he's found water in the crawl space and some water damage in the attic and that the seller, according to him, is liable for those damages. I politely say disagreed with him and said that I don't think the seller's liable for those because he keeps wanting to cite, kept wanting to cite the seller's disclosure statement, and I said, hey, you know, the seller has a responsibility to disclose known defects. The seller has to be aware of those defects, and this seller never lived in the home, and a seller is not responsible to inspect the property. Okay, so they never knew about that, never lived in the home. So you see, in this case, the seller had purchased the home many years before. She and her husband at that time remodeled the whole thing, did a great job on it, by the way. But then her son and her daughter-in-law lived in this home for a long period of time. And then what happened, her husband then passed away, and then her son and daughter-in-law got divorced, and her son moved out of the area. And so then it seemed like a good time to sell the home. So anyway, I'm working with this now widowed woman in her 70s. She decides to sell the property. And by the way, when I sat down with this client to fill out the various paperwork involved in listing a property, she had a very busy schedule. She was caring for another aging relative that she was having to travel back and forth, and she had forgotten— couldn't find her reading glasses. And, and so I helped her with the paperwork. You know, my mother is actually legally blind, so I, I suppose I'm a little predisposed to helping, um, women of a certain age who are having trouble seeing. I'm just sort of used to doing that. So, so I actually acted as a scribe and read and wrote down everything verbatim that she said, and I read the seller's disclosure statement to her. Now, later I was told by my brokerage attorney that I should not have done that. While it was nothing illegal, it can lead to issues like it obviously led to in this case. So learned my lesson there. I'll, you know, I still find it hard sometimes not to be helpful in situations. I don't want to be overly legalistic in my thinking. But anyway, so because I did that scribing, this, this buyer later wanted to claim that I had conspired with the seller to falsify this document or something along those lines. Anyway, it's important for you to remember when you're filling out a seller's disclosure statement that you don't have to inspect the home. In fact, almost every home inspection that any of my seller clients have seen, they've always been surprised at some defects being revealed to the home that they had no idea about. And they're, they're actually living in the home. Whereas remember, this client never lived in this home and it was her son that had lived there. But anyway, it's a normal thing for defects to be discovered by home inspectors that the homeowner didn't know anything about. Still, I wanted to be helpful to this buyer, and $35,000 seemed like a lot of money to fix these problems. Remember, my father-in-law is a longtime builder in the area. My sons— my older son is a carpenter for a local builder. My younger boy is a house painter. So I've got a little bit of knowledge around this kind of stuff. So anyways, went down and into the crawl space with the buyer, looked at this puddle that was in— I would say about 2 feet by 3 to 4 feet. There was some dampness in the sand outside of that 2 to 3 feet little puddle, but the majority of the crawl space was bone dry. And this new owner had gone to one of these waterproofing of crawl space and basement companies and received quote, to waterproof the entire crawl space for upwards of $30,000. Well, that seemed like an awful lot. That seemed like overkill to me. That seemed like, you know, bringing a sledgehammer to swat a fly. We only needed to address one little portion where there was, you know, water in the crawl space. So I actually offered to contact what I would describe as a kind of a water flow savant in the area, works a lot within Northport. He really knows his stuff. And so I coordinated with him. He comes out to take a look with this buyer and me, and basically found that the ditch— I mean, he's got a laser, this guy knows his stuff. The ditch was full of leaves, just packed full of leaves. And actually, when the water would hit the ditch where it was designed to flow farther down, a modular home right next door had just been put in and they had filled in the ditch so when, so when they drove the modules for the modular over, it was smooth. They didn't go down into the ditch, okay? And so between the ditch out in front of this newly purchased home being clogged with a whole bunch of leaves and the ditch having been filled in on the adjacent property where the flow of water would go down into the ditch, down into a storm drain, into Northport Bay. It was backing the water up, according to this expert. That was what was likely leading, and the big thaw that we had where, you know, the water had likely come in actually where the crawl space was penetrated from the city water service. Anyway, you know, to rectify all of this would have been a fraction of this cost of $30,000. But this buyer didn't really want to hear that. I mean, he was looking forward to this really expensive solution again, bringing a sledgehammer to kill a fly. But of course, my seller would have no responsibility, even if she knew about this puddle in the basement, would have no responsibility to buy an entire waterproof crawl space. She may have had responsibility to fix, had she known about it, to fix this little puddle. Then he kind of turned a little— it just turned, you know, basically that he was going to threaten legal action, and that's when I had to step back. And just say, "Well, you know, I understand you've got to do what you got to do. My contention is that my seller is not responsible for any of this." You know, I wished him luck and said, you know, I've got to kind of break away at this point. Well, this buyer went after the inspector, which I think is justifiable, went after my client, my seller client, and me, which I don't think is acceptable. So he says to me, "You need to pay me X amount or I'm going to ruin your reputation." You know, I can go on and do a lot of damage online and that kind of stuff. Well, I think the people that, you know, I have no problem, never had any problem with taking responsibility for the mistakes that I make. In fact, I made a pretty serious mistake representing a buyer client on the purchase of a home out in South Boardman and ended up buying my client since I accepted responsibility for my role in it. Bought my client a home. My client a brand new drain field, septic field, the whole thing. So I have a strong history of taking responsibility for my mistakes. In this case, I didn't make any mistake, did nothing wrong, and, and I believe that my client didn't either. So I'm also not one to respond well to kind of bullying or threats in that way, and I will always very assertively protect the interest of my client and of, frankly, of my business. So I remained polite and professional, but I let him know that my contention was that neither my client nor me had done anything wrong. Then I proceeded to receive a number of pay or else type letters from his attorney, and I was with Key Realty at the time, and I actually met with my managing broker, the, the broker, and the attorney for Key Realty and talked about it. And at that time, I sort of did get my hand slapped for having acted as a scribe. That was something that the broker's attorney did not think was a good idea. Certainly he said there's nothing unethical or illegal about it, but it leads to these kinds of issues. And so You know, to keep them from having headaches, it was like, don't do that in the future. And I appreciate that, although I do get a little— oh, and they also didn't like the fact that I had plowed for him, and it just, in their opinion, had opened myself up to a lot of liability. And again, I appreciate that. I regret the fact I kind of grew up Northport being a small town, and, you know, that kind of thing. And I think we're getting to a point where unfortunately you can't just be a good neighbor anymore. But so that's where I feel like it's a little bit like no good deed goes unpunished, you know. But despite all of that, I don't want to stop being neighborly and helpful to people. And, you know, I do put myself out there as a full-service realtor, and that's kind of what I'm talking about, that I'll help in, in ways that are normally outside of what a real estate agent necessarily is expected to do. I regret the fact that that in this case led to this kind of ill will between this buyer— again, never my client, okay— and my client and me. So anyway, the repeated letters from his attorney, basically I was advised by Key Realty's attorney to just let those go and not respond to them. He later then reported me to the State of Michigan Licensing and Regulatory Affairs agency. Or Michigan LARA, who investigated the matter and found no fault, found me at no fault whatsoever. Still unsatisfied, then he reported me to the Aspire North Realtors as, as an ethics violation. Again, Aspire North Realtors reviewed the situation and found no fault on my part. Still unsatisfied, he then appealed that decision to Aspire North They reviewed it and again found no fault on my part. Then this individual started leaving me negative reviews on various real estate websites like Zillow, Realtor.com, etc. And in fact, you know, by the way, those reviews are intended to be for clients or former clients. And again, this individual was never my client. And so when I received notification of those reviews, I reached out to those websites and explained this individual, and he even admitted to it in the reviews, was never my client, and so therefore should not be able to leave me these reviews. They agreed, took them down. Well, he was so persistent in reposting these that eventually one of those websites actually banned him from the website, just getting to that point where it was just too much. And so they banned him from the ability to to interact with the website anymore. So then he turned to Google reviews, and now he's left me, uh, two 1-star reviews on Google, one under the pseudonym of Human Being, and then the other has his first name on it. So, so those are the two reviews. I think if you were to look at the other reviews on my website or on the, uh, my other Google reviews, overwhelmingly positive responses from my clients. I really do pride myself on going above and beyond the call of duty, which I felt like I really tried to do for this particular buyer, again, who was never my client. But because I wouldn't support him in his efforts to bring a sledgehammer to swat a fly, you know, I think that then that just was, was game on for him. And so then it's going to be what it's going to be because I just don't, I just don't do business like that. Again, I've always been in situations like this. I've always been of the mindset of, I don't believe I've done anything wrong, but let's submit it to a third party. And he submitted it to multiple third parties who all found that I hadn't done a thing wrong in my representation of my seller client. And I still believe that my seller did absolutely nothing wrong. Again, she had never lived in the home and was not aware of any of those issues. It really— since she never lived in the home, and she really wasn't physically able to go down into the crawl space or up into the attic, I don't know how she would be aware of those issues. So that, that's one thing. I guess the biggest lesson out of here for you as a seller is just to make sure that you are honest and open in disclosing everything that you know about known defects on a seller's disclosure statement. You do not want there to be any appearance that, that you've swept something under the rug because that can come back to bite you. In this case, my seller, I believe, did all of that properly and it still came back to bite her. So there's, there's some stuff that you just can't— seems like you can't protect yourself against. But in my case, I'll, I'll certainly try not to ever act as a scribe for a seller client again in the future. I have though There are times where I've dealt with some older folks, a different client. I sold a home for him out Buckley Way there, and, you know, he had a really hard time. He was an elderly guy, had been a farmer all of his life, and he just had a hard time grip— even gripping the pencil. He was just of that age where— and so, you know, sometimes you just got to use your judgment as a realtor. Certainly I understand That was an area that maybe if I had to do over again, I'd ask her to look a little harder for glasses. But anyway, there's the story about the importance of seller disclosure statements and what's up with that, that those two bad reviews on Google. Now, despite those two bad reviews, I think DeeDee still loves me. Don't you, DeeDee? Yeah, DeeDee still loves me, so that's all that really matters. All right, and hopefully most of my past satisfied clients who have left me all kinds of great reviews, hopefully they still love me too. So all right, appreciate you tuning in. Thanks a lot. I'm Sander Scott, your full-service realtor.