3 Real Estate Errors Made With Special Needs Clients

Bully

I have recently represented three different clients with special needs, two of which were working with the same real estate broker. In all three cases, the client communicated his/her special needs to the broker but the broker did not adequately protect the client.

Case #1: Preliminary Title Report Not Disclosed

In the first case, a broker represented a seller who was undereducated, marginally employed and had limited English skills. The broker spoke the seller’s language. The seller told the broker that he needed a specific “net” from the sale in order to purchase a replacement property. The broker pulled a preliminary title report at the time she took the listing, but did not provide a copy of it to the seller. Had the broker done so, the seller would have known about extra liens recorded against the property record before accepting a reduced price offer. Instead, the seller’s first view of the title report was a supplemental report sent by the title company after the discounted offer was accepted. The offer contained no seller contingencies. The seller ended up selling the property to the original buyer but did not get his net proceeds. I was able to recover most of the lost proceeds from the broker. Here is why:

The RMLS (Oregon) Listing Agreement at Section 4, subsection (c) states that the listing agent will “obtain and disclose any information pertaining to any present encumbrance on the property…”

This means that if you get an early prelim (before an offer is in place), you better send it to your client.

Case #2: CC&Rs Not Reviewed

In the second case, the broker had represented a real estate investor several times previously. The investor had recently suffered a traumatic brain injury and had been told (by her doctor) not to make any business or financial decisions until he had fully recovered. The client shared this information with the broker who, nonetheless, suggested the investor purchase a specific house. The investor agreed, but told the broker “you need to take care of me due to my brain injury”. The broker did not take any special care.

As it turned out, the CC&Rs for the property restricted parking. The broker did not review the CC&Rs with the client (and did not suggest the client have an attorney review them). This resulted in the client purchasing a four-bedroom property at a high price that, practically speaking, could not be rented to a party with more than two cars and two friends. The client ultimately decided not to pursue the broker despite my recommendation that she do so.

Case #3: Purchase & Sale Agreement Without Listing Agreement

In the third case, the client was depressed. He was approached by a real estate broker to list his home many times over the course of a year. Each time the seller told the broker how depressed he was and why. Each time but one, the seller told the broker he did not want to sell his home.

The last time, he was especially vulnerable and agreed to sell to stop the noise (the listing broker was persistent, if not especially competent). The listing broker actually had the seller sign a purchase and sale agreement before he signed a listing agreement. Gee, do you think that the same buyer had been trying to buy the property for a year?

Nearly immediately, the seller realized he had agreed to something he did not want. The listing and selling agents were in the same office. The listing broker apparently had the purchase and sale agreement ready to go (but not a listing agreement?). What’s wrong with that picture?

The broker did not give a thought to the seller’s depression and never exposed the property to the market. Who was she representing? Not the seller, I can tell you that. The seller ultimately decided not to pursue the broker. However, he did end up selling his home which only aggravated his depressed condition.

Conclusion

You can’t treat your clients like they are Model T Fords. You aren’t operating a production line. Each client has to be served according to his or her needs. If your client tells you something about their health or plans or needs, listen to them.

Like it or not, you need to make sure that you are representing their interests rather than your own, even if it costs you a sale from time to time.

  1. John EhrleinJohn Ehrlein12-17-2015

    Mrs. Brooke,

    Thank you for sharing this information.

    Sincerely,

    John Ehrlein

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