Now What?

Agents are gladly walking off the marathon sprint that was the real estate race of the last three years, attempting to keep up with the pace of what customers wanted, which as it turns out, isn’t always right so it seems.

A growing regret is rearing its ugly head in real estate clients across not only the U.S. but in Canada as well. Hindsight is 20/20 has a new, unexpected double meaning now for Wendy Ronberg, Franchisee of EXIT Realty Vision in Ottawa, who was recently featured in a CBC article on the topic of homeowner recourse in the aftermath of the Great Relocation.

Impossibly truncated turnaround times left no room for mortgage broker consultations and left clients at risk of paying well over asking/appraisal or foregoing protective conditions just to compete. Like so many agents Wendy watched in dismay wondering how she could keep her clients safe.

“Your number one goal is to make sure you’re providing great service for your clients, and that means ensuring you're taking care of their needs and not putting them in harm's way,” she said of the Catch 22 so many faced. “We would do pre inspections, which can cost anywhere from $500-$650 depending on the property. Often, I would have clients where it would take at least four or five homes before they would win a bid. I had one client win on their 11th. Clients would spend close to $2,000 on inspections on the first two or three homes they put offers on, but after that they just couldn't do it anymore.”

A self-motivated individual by nature, with over 20 years as an educator prior to getting licensed, Wendy prioritized due diligence and learning all she could about properties for her clients. She also leaned on term clauses, seen as the friendlier, flexible inclusions to their more abrupt conditional counterparts, to still build a sense of security around things like financing, inspections, as well as insurance. She also spoke openly with clients about factoring in worst-case scenarios, as well as time of ownership for her military customers to help them weigh the risks and resale ROI.

COMMUNICATING WITH CLIENTS & THE IMPORTANCE OF FORM 127'S

But the most important thing she did was keep communications in writing, a task some agents are lamenting not doing now as disgruntled clients and their litigations pop up across North America.

“From REALTOR® to REALTOR®, it’s so important to make sure that everything is documented. I can't stress that enough,” she urged. “Keep all your records with your communication, your emails, your texts. If you just had a conversation, send an email back to that client or agent saying, ‘Just so that I'm clear in our conversation…’ You restate it, and then have them confirm it so that things are on paper.” Sales Representative, Jenny Guth, recently joined Wendy’s brokerage and couldn’t agree more. Real estate is a second career for her, and a natural progression from her day-to-day law practice. She’s handled civil litigation cases since 2002, mainly with regard to insurance defense matters. This included the defense of REALTORS® for the Real Estate Council of Ontario (RECO) from 2008-2010 and title insurance defense cases since 2018.

“I cannot emphasize enough that agents ensure they keep a thorough and clear record of the entire transaction – texts and chats are difficult to download later on. I always use email myself,” she shared explaining that it's something that all real estate professionals should be concerned about. Why? Because not all agents utilize a Buyer’s Acknowledgment (Form 127 in Ontario), which in no uncertain terms ensures that clients acknowledge in writing the risks involved in and responsibility for waiving conditions.

Agreement Of Purchase Of Sale

“The Agreement of Purchase and Sale (APS) is an extremely important document that I feel isn’t treated with the respect that it should be, nor explained very well to clients. It’s a binding, legal contract once accepted – clauses should not be included or excluded lightly. I’ve seen some very poorly drafted APSs. Clear instructions on every term should be obtained from the clients (in writing), and if they do decide to waive any conditions, it’s vital that the agent has them sign a Form 127. It will at least show that the buyers were warned of, contemplated, and accepted the consequences of their decisions,” she said.

Another great addition to an APS is a version of the “LAW-3 – Legal, Accounting or Environmental Advice” clause in which the parties acknowledge that the broker or salesperson(s) have urged and recommended the signer to obtain independent professional advice before signing the document, and that no information provided should be construed as legal, engineering, zoning, accounting, tax, or environmental advice.

Buyer Beware Defense

Jenny says sellers should fix issues with a home, or at least disclose any they’re aware of. She has seen the legal fallout when buyers’ expectations aren’t managed well, and how buyers’ agents can get dragged into those situations.

“It’s my belief that many lawsuits recently have arisen out of buyer remorse once they’ve realized that they bit off more than they could chew. There’s always recourse, but whether it actually gets [the client] what they want is another question. ‘Buyer beware’ or caveat emptor is a very important defense in these cases,” she explained. “Clients can try having their agent reach out to the selling agent to see if some sort of compromise can be reached. They can commence a lawsuit, but risk that their own REALTOR® and even their real estate lawyer will be brought into it. Even then they could lose badly. Sometimes title insurance can help them out, but that’s a very narrow type of coverage, specific to title issues. It’s not ‘home warranty’ insurance. They can also, of course, accept the decisions that they made and live by them, even if in hindsight they were not the most prudent. Unfortunately, the frenzy of the market during the pandemic led some people to take risks they might not have taken in a more normal market, but that’s the choice they made. It’s not always someone else’s fault.”

Wendy suggests aside from recommending clients seek legal advice, what separates the mediocre from the professionals is how agents can still be of help to clients who find themselves stuck with homes they’ve purchased saying, “I try to help them with the right trades people, some offer payment plans, and then I also see whether they can reach out and talk to a mortgage broker, there’s also the rental piece. Could they get the home ready to rent and get money from that and move back with their parents for example. I’ve had clients do that.”

In the end, that’s what being in real estate is about to Wendy. She aims to surround clients with a team that can help saying, “You don't work in your own silos, and you should never work in your own silos. You’re working together.” And that’s something she feels should never change, no matter the market.