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Are you liable if you don’t spot a defect during a showing?

On Behalf of | Dec 22, 2022 | Residential Real Estate |

When you represent a buyer as a real estate agent, the process of touring homes can be very exciting. There is nothing more rewarding than seeing a client finally express interest in a property and inform you that they want to make an offer on it. It can take a lot of legwork to get from discussing someone’s housing preferences to submitting an offer.

As an agent, part of your job is to help in that search, and part of your job is to protect your client from people who would try to mislead them. Sellers have legal requirements to disclose defects that they know about, as do the agents representing them.

However, clients may blame you personally for failing to notice signs of a sinking foundation or a failing electrical system. Are you personally responsible if you don’t spot defects when touring properties with your clients?

Agents are only the first line of defense

As an agent who has likely facilitated many property sales and purchases in the past, you know what kinds of defects will affect property values the most and what issues are largely cosmetic. Of course, there are latent defects that you may not spot during a rushed walkthrough with an enthusiastic client, as well as issues that you may overlook entirely, possibly because you never enter certain parts of the property.

In theory, a buyer’s inspection will turn up any issues that you miss in the initial walkthrough. However, cash buyers may choose to waive their inspection as a way of cutting a few hundred dollars of closing costs. In such a situation, unhappy buyers who discovered defects while after moving into a property might try to hold you responsible. At that point, your errors and omissions professional insurance could protect you from any financial repercussions related to those defects.

How agents can minimize their risk

Transparent communication with buyers is always best, and agents should avoid applying sales pressure to the buyers that they represent. The people that you take out to view homes want to make a purchase, and it is in your best interest not to get them to close as quickly as possible but on the best home possible for them.

When you keep the pressure to a minimum and ensure that buyers understand the limits of your inspection ability, you will reduce the likelihood of them blaming you for something overlooked during a visit to a property. Identifying recognizing property defects is a potential source of professional liability can help real estate agents facilitating residential home sales.