This is a form I wrote for a house that Cathleen may or may not have in play. The details have been fictionalized, but the underlying situation — a house trashed so badly that it becomes a menace to safety — will probably only become more common.
Caveat lector: I am an Arizona real estate broker, empowered by our state’s constitution to prepare documents incident to the transfer of real property. Your local laws will be different.
BUYER IS PURCHASING REAL PROPERTY AGAINST ADVICE OF BUYER’S BROKER
Buyer’s Broker herewith explicitly advises Buyer against the purchase of 123 Mulberry Street, Hadleysburg, AZ.
1. Buyer is aware that property has been looted by a previous owner, tenant, burglar, interloper or tenant-at-sufferance.
2. Buyer is aware that all kitchen appliances, fixtures, counters, cabinets, shelving and appurtenant items have been removed from the property.
3. Buyer is aware that the truss-mounted air-handler has been removed from the property.
4. Buyer is aware that the extent of any additional looting is undetermined and is substantially indeterminable.
5. Buyer is aware that attempts to repair or refurbish this property could result in further damage to the property and/or injury or loss of life to Buyer or Buyer’s contractors or employees.
6. Buyer is aware that repairing or refurbishing a property in this condition is a task that should be undertaken only by experienced building contractors.
7. Buyer is aware that additional damages resulting from attempts to repair or refurbish this property could destroy any or all residual marketable value in the property, with such loss in value being Buyer’s sole responsibility and liability.
8. Buyer is aware that injuries or deaths resulting from attempts to repair or refurbish this property could be construed by courts or insurance companies to be Buyer’s sole responsibility and liability.
9. Buyer is aware that many other residential properties, substantially in turn-key condition, are available nearby at reasonable prices.
10. Buyer has been advised numerous times of Buyer’s Broker objections to this purchase.
ERGO, BUYER ACKNOWLEDGES BY HIS SIGNATURE HEREUNDER THAT BUYER IS PROCEEDING WITH THIS PURCHASE AGAINST THE PROFESSIONAL ADVICE AND JUDGMENT OF BUYER’S BROKER, EXPRESSED REPEATEDLY AND STRENUOUSLY.
Buyer agrees to release, indemnify and hold harmless Buyer’s Broker for any and all losses, damages, injuries, deaths or liabilities of any nature resulting from this purchase.
This instrument is an Addendum to the Buyer-Broker Agreement executed between Buyer and Buyer’s Broker on December 1, 2008, and is incorporated therein as additional terms and conditions of that Buyer-Broker Agreement by this reference and by the mutual consent of Buyer and Buyer’s Broker.
We’ve done these kinds of things before — never this radically — and the purpose is to get the party to come to Jesus: “Well, if you feel that strongly about it, let’s go ahead and have the inspection.” But for issues this large — at prices this low — I’m not sure this language is scary enough…
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Eric Bramlett says:
Wow…. Are they still moving forward?
December 15, 2008 — 12:57 pm
Greg Swann says:
> Are they still moving forward?
TBD.
December 15, 2008 — 1:02 pm
genuinechris johnson says:
A stronger statement would be to not take a commission on this property and let the buyer go.
I would think that that would be baseline integrity, personally.
December 15, 2008 — 1:04 pm
Greg Swann says:
> A stronger statement would be to not take a commission on this property and let the buyer go.
That would be the next step, assuming the Buyer won’t back away from the house. But that only terminates the Buyer-Broker Agreement. Agency endures for the agent in perpetuity. In other words, once an agency relationship is established, failure to issue a warning like this is a betrayal in se of the client’s interests regardless of the status of the Buyer-Broker Agreement.
> I would think that that would be baseline integrity, personally.
It’s a matter of fiduciary duty, period.
December 15, 2008 — 1:14 pm
Greg Swann says:
Incidentally, this is a nice illustration of why brokers should write firing clauses in their employment agreements — which almost none do. Realtors can be so much concerned with binding down their clients that they fail to see how they are themselves bound to act regardless of the wisdom or justice of that action.
December 15, 2008 — 1:23 pm
Brad Coy says:
WOW! I’ve never seen anything like this. Thanks for sharing… good luck.
December 15, 2008 — 3:35 pm
J Boyer Morristown NJ says:
Wow, I have never seen one of these that has gone to quite this extent.
December 15, 2008 — 5:16 pm
Doug Quance says:
It’s a good disclosure. I like it. I wouldn’t walk away from a deal because my client is an idiot. Idiots need brokers, too. The Doc says don’t smoke – but if you do, he still treats you, right?
Good luck with that one, Greg.
December 15, 2008 — 8:38 pm
Ned Carey says:
I think a written disclosure is a good idea but this seems like overkill to me. But you left out the fact the the project is economically unfeasible.
I buy stuff like this all the time. What’s wrong with buying a fixer upper?
December 15, 2008 — 10:53 pm
kevin pellatiro says:
Thank you for displaying your situation Greg. Have you seen or needed this type of application in less extreme circumstances as well?
December 16, 2008 — 3:23 am
JCL says:
No matter how low the price, they should *always* get the house inspected. You never know what lurks even on the best of properties. There could be a major issue hidden, but on this house it sounds like they are buying despite obvious issues.
December 16, 2008 — 8:39 am
Greg Tracy says:
> A stronger statement would be to not take a commission on this property and let the buyer go.
I don’t think that is necessary as I don’t think it is our job to make decisions for people. Our job is to inform, advise and educate them to the best of our ability and give them their options and let them make an informed decision.
They may choose to buy the property against your judgment and hire a contractor to renovate or rebuild it and they could end up with a good property.
As knowledgeable and experienced as we are, we don’t know everything and people have the right to purchase the property they choose. As long as we have informed, advised and educated them as best we can, we have done our job.
We facilitate the transactions for our clients, not decide which transactions they should be involved in.
December 16, 2008 — 11:46 am
jay says:
What’s frustrating is giving good advice such as telling somebody to not buy a home at a certain price and having them disregard your advice to walk walk away from the deal. Then 6 months later they are upset at your inability to negotiate the price down when you told them to walk in the 1st place….They want to blame their not taking your advice on you. Nutz!
December 16, 2008 — 11:57 am
Bob says:
I like it!
December 16, 2008 — 7:54 pm
Matthew Rathbun says:
Bravo! This is a great example of integrity. I was in a conversation with someone about Caveat Emptor yesterday – its a joke. Agents are always the punching bags of a consumer’s bad decision.
In our state its hard to separate one’s self from the client, once an ostensible or expressed agency relationship is formed. Therefore the best you can do is simply disclose in writing that they are making a bad decision. Unfortunately, a buyer (who maybe a knuckle-head) may still sign and then try and sue later.
Thanks for sharing.
December 17, 2008 — 9:24 am
Barry Cunningham says:
Overboard! If the client doesn’t understand “AS-IS” then maybe don’t take them on as a client. I have bought houses with chalk outlines from dead bodies. I have bought houses that were burned out. I have bought houses with such bad mold that I thought the walls were painted blac. I have bought houses wherein the termites had basically devoured the roof trusses.
And I mad money on EVERY single one of them. Why? becasue I knew what I was doing and the agent involved also knew.
Moral of the story, unless agents educate themselves and become professional liquidators they will be left behind. Been saying it for over a year and the continuing thinning of the herd underscores what I said.
This type of document, while composed with great intention, is, in my opinion, like putting warning labels on cigarettes. It’s pretty much meaningless. If someone is going to sue, their going to sue.
There will ALWAYS be a lawyer out there who will be willing to take the case.
Best defense is a good offense. Don’t take the client who is inexperienced and does not know what they are doing.
We have been so busy here in South Florida, arguably ground zero for distressed properties, that we had to stop the radio show becasue the bounty of opportunity. We get dozens of buyers each week who want to get in on the foreclosure bonanza and we turn away business.
Why? Becasue we don’t need the hassle of dealing with a newbie or wet behind the ears, gonna take it in the rear wannabe.
Has it really gotten so bad that agents would rather present these types of documents instead of just saying no thanks!
Forget the Perry Mason impersonations and move on to a client who knows what the heck they are doing…geez…
Agents seem to be so quick to say it’s the “consumer’s bad decision”. Just walk away. You don’t have to represent someone if you don’t want to.
There is SO MUCH out there that it amazes me when I read this kind of stuff.
But hey, that’s just my opinion.
December 17, 2008 — 9:40 am
Bob says:
Barry, I agree with one exception.
There are times when an offer is written without knowing the full extent of the material facts and issues that go with the property. It is one reason why we have physical inspections. I had one such inspection that revealed so many structural defects that weren’t observed during the 10 minute showing of the property that led to the offer, that I did everything I could to talk the buyer out of the deal. She didnt listen. She closed escrow, but when the gas company red tagged the heater because of the 3 inches of rat nesting and droppings, she tried to sue everyone – down to the termite inspector.
The one thing that saved my a$$ was my written communication to her advising her that she should seriously consider passing on the property.
The role you play as investor/flipper doesn’t saddle you with the same fiduciary duty that I have, or the liability that goes with it.
December 17, 2008 — 11:44 pm
Fort Lauderdale Real Estate says:
@Bob…”role you play as investor/flipper”….what’s that supposed to mean?
I have NEVER “flipped” a property. I have indeed purchased and re-sold property for a profit which is the basis of the real estate business.
When I commented above, you must have missed the point wherein I said we were selling properties. Meaning we work with agents in our company who represent sellers and buyers in traditional transactions.
Let me ask you something. When you said that you “advised her to seriously consider passing” on buying the property…why didn’t you just elect not to represent her and not take a commission? Then you wouldn’t have any liability at all. No need for a serious “advisory”.
That’s my point. If you feel as you state that it’s a deal wherein you would not advise your client to buy the property…why not just walk away? Why would any agent posture behind some ridiculous document wherein their is some feigned concern. Just walk away!
You wouldn’t have needed that one thing that “saved my a$$”…why? Because you wouldn’t have been involved!
Oh…but then there wouldn’t be any commission. I guess the concern isn’t all that great is it!
Before you flame me..hold on. I am not referring to your specific deal and no one in particular…it’s just that I run into agents day in and day out who want their cake and eat it too. That desert doesn’t exist.
Unless of course the concern is so great that the agent terminates the relationship and walks away. Which wasn’t mentioned in this “document” nor your comment.
December 18, 2008 — 8:14 am
Barry Cunningham says:
Bob..I responded but my comment was deleted. Testing this one
December 18, 2008 — 8:16 am
Greg Swann says:
> Bob..I responded but my comment was deleted. Testing this one
Nothing was deleted. You got eaten by the spambot by posting a comment that looked like spam.
I added this text to the comments box a few weeks ago
to deal with spammy comments.
December 18, 2008 — 8:43 am