How to avoid disasters after closing

by Theresa D. McClellan

There is a recipe for disaster involving agents, buyers and sellers that every agent aims to avoid. Chicago real estate attorney and first-time homebuyer instructor Ranj Mohip calls it “Post-Close Nightmares.”

When the seller doesn’t disclose history, the buyer doesn’t explain their full plans for the property or the agent doesn’t ask enough questions, Mohip usually gets a call.

“Anytime there is a problem with a post-close issue, somebody didn’t do something they were supposed to do. Sometimes, it’s the attorney. Sometimes, the agent. Sometimes, the client,” he said.

Proper preparation before closing

Mohip recalls the woman who fell in love with a condo and spent all her money to land the unit. She learned after moving in that the darling 95-pound Mastiff she’d owned since he was a puppy would not make the cut. The homeowners association board had a 25-pound limit on pooches and sent her a letter to get rid of the dog.

Heartbroken, the woman tried rallying support from her new neighbors. She sat outside her home waiting for other dog owners to appear and gave them a sensational letter written by Mohip, with a picture of her dog as a pup. In the end, she was able to keep her dog, paid a small fine and had limitations on when she could bring the dog in or out of the unit.

All this could have been addressed with early questions before the sale, Mohip said. “Now you are negotiating from a point of weakness,” he said.

Getting the details before the close is essential to getting the keys to a home without any static. Asking the client their plans for the home, making them aware of deed or condo advisory board restrictions and insisting on surveys, inspections, title searches, building code violations, property fines and insurance are all essential in avoiding most problems.

Going beyond inspections

Chuck Roush, productivity coach with Keller Williams Realty Memorial in Houston agrees.

There are things the buyer, the seller and the agent can do to prevent post-close nightmares, Roush said, who trains agents to do it right the first time as yet another way to get referrals and repeat business.

Buyers and sellers should always hire a real estate agent for representation, close at a title company, get title insurance and always get a residential service contract, Roush said.

Prior to closing, a home warranty is a regular parting gift for sellers, said Miami Realtor Dean Sklar of the Sklar Team, Coldwell Banker.

“If an inspector missed something, this will be covered. Say the AC broke the next day. It’s covered and they think of you as the Realtor looking out for them.” said Sklar, who joined his wife Rose Sklar in the business.

“If something is broken, it’s a great way to stay in touch and rather than being upset, we say it’s a good thing we purchased this for you. Instead of flowers or a gift certificate, it’s better to give peace of mind,” Sklar said. “It’s all about service.”

But even when you think everything is done, “buyers should always do a final walk-through before closing and have repairs done by the seller inspected again by a licensed inspector,” Roush said. “Sellers should hire only licensed contractors or service providers in the specific trade to complete repairs negotiated with a buyer.”

To protect yourself and your client, always get everything in writing, in clear and specific emails. And, as the coach noted, loyalty to a client should never trump one’s ethical and legal responsibility to do the right thing, obey the law and urge your clients to do the same.

“Work only with pre-qualified buyers and sellers who are willing to listen to your professional advice,” Roush said. “Be prepared to walk away from (fire) a client who is wanting to do something unethical or illegal.”

Getting real with clients

But what about when clients don’t listen?

Mohip had a client from Florida who was eager to spend $2 million in cash for multiple condos in Chicago because the client had plans to rent them out as short-term rentals but did not disclose that information. Mohip gave him the paperwork to read but the client didn’t notice that leases under nine months were not allowed.

“He overpaid because he thought he’d make it up monthly. A one-bedroom in some of these condos can rent for $1,500 a month and with $150 a night Airbnb rent you can get up to $4500 a month. But he was stuck,” Mohip said.

Mohip also recalls a couple of clients who fell in love with a property until Mohip recommended they not buy it because there were no permits for the work done on the property.

“They were like, ‘no, we want it,” Mohip said. “Their agent told them to drop me and get another attorney because I wasn’t pushing the deal through. I said I don’t think your agent has your best interest at heart, but it’s all about your commission. They closed and there were multiple problems.” He was friends with the owners but they loved the property more and went with the agent’s recommended attorney and closed the deal. They quickly learned that since no permits were approved, workmanship was shoddy and their floors buckled in the basement because a moisture barrier was never installed. Pipes were bursting because vents weren’t cut out for the furnace.

“I really tried to tell them, this is not the deal you are looking for and if you do, you’ve got to get the price way down to pay for repairs,” Mohip said. “I’m putting a lot at the feet of the agent. That buyer could have said, ‘I still want it.’ You can’t protect people from themselves.”

Getting matters checked out and being serious about the results is important, the attorney explained.

“You can buy a hooptie and get it inspected. People do that for a $300 car, and yet don’t get an inspection for a $300,000 house?”

But inspections are not guaranteed.

“Most home inspections, if you miss something, the remedy is, we’ll give you back your inspection fee. So $300 back for a $5,000 problem is not the greatest return,” Mohip said.

“You have to be very on top of this stuff,” he said. “No one will be on top of it for you.”

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