Real Estate Round-Up: Responsibility rests with buyers and sellers
Last updated 7/24/2020 at 2:02am
Responsibility is a noun that means the state or fact of having a duty to deal with something or of having control over someone, such as in “a true leader takes responsibility for their team and helps them achieve goals.” It’s synonyms include authority, control, power, leadership, management, influence and duty.
Responsibility. We all have it. In our house, I have the responsibility of caring for the inside of our home. I am responsible for keeping it clean, for doing the laundry, for grocery shopping and cooking our meals.
My husband, Chris Murphy, is responsible for the outside of our home. He is responsible for the landscaping, the care of our pool, walking our three dogs and maintaining the general maintenance of our home.
Even though it may sound old fashioned, these responsibilities work for us, and it is the organization we use to make sure that everything is taken care of. I don’t always understand what he is doing, and he doesn’t always understand what I’m doing, but working together, it all works.
We hire people to help with our responsibilities, like landscapers, pool cleaners and housekeepers. But the ultimate responsibility remains with us. We don’t blame our housekeeper if the floors aren’t clean. We oversee what she does to guarantee that the floors are clean. We don’t blame our landscaper if the weeds are growing. We oversee what he does to make sure that the weeds are removed.
It is also a very simplistic model of your role in a real estate transaction. You, the buyer or the seller, are responsible for the outcome of your transaction. Your Realtor is there to guide you through the process and do some of the heavy lifting, but you retain the ultimate responsibility. Your Realtor is your fiduciary. Makes sense, right?
Too often that scenario is not what occurs. Too often, buyers and sellers relinquish their responsibility and leave it with their Realtor. It is not a sound decision. Let me explain.
It is the seller’s role to determine the selling price of their home, to provide honest and complete disclosures about their home and to negotiate in good faith. There is even a form that we use when we list a property or when we write a purchase contract that addresses this role.
It is named the Market Conditions Advisory. It states in Paragraph 2.A that the buyer is responsible for deciding what they want to pay for the home and in Paragraph 3 that the seller is responsible for determining the price that they sell their home for.
You might say, well, of course, the seller determines the price that they sell their home for. Sadly, the form exists because a few years back, when prices were climbing faster than a trumpet vine, buyers were paying considerably more for a home than they anticipated they would have to, just to “win” the property.
When the market crashed in 2006-2008, one of those buyers sued their Realtor, stating that their Realtor made them overpay for the home. I’m happy to say that the buyer did not prevail but, as a result of the lawsuit, the form was created. The principals to the transaction, buyers and sellers, are responsible for the purchase price.
No handing-off allowed.
I could share a story about nearly every form and report that is required in a Realtor managed transaction, similar to the one above. Most of the forms have been added because of a lawsuit by one of the principals who believed that their Realtor is the responsible party, when in fact, they are not.
The complexity of the transaction is a result of the many touch points of responsibility throughout a listing and an escrow, not because we want it to be complex.
The primary way to hold on to your own responsibility is by reading every word of every document and report, and ask questions, when you don’t understand.
A professional, experienced Realtor will read those documents as well, but the things that stand out to them, might not be what stands out to you. They are your fiduciary to help you find the answers to your questions when you have them, not to make the decisions for you and, through that, become the responsible party.
Documents created by the California Association of Realtors are designed to be able to be understood by you. They are legally binding, without all the legal vernacular. Your Realtor is educated to be able to explain what the documents say.
There are other reports generated by third parties, like the Title report, natural hazard disclosure report, pest report and septic report. Realtors have a familiarity with those reports so can often answer your questions. But the parties who created those reports can explain their findings, when necessary.
What’s the bottom line? You are the responsible party. A professional, experienced Realtor can help you understand the forms and reports, provide you with your options if the document requires you to make a decision, or direct you to the entity that produced the report to facilitate your understanding of it. That is their responsibility. Working together, you will gain knowledge and power, and find the results to be satisfying.
Kim Murphy can be reached at [email protected] or 760-415-9292 or at 130 N. Main Ave., in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.