I had a mini tirade a couple of weeks ago (including a poorly produced podcast), the object of my rant being Redfin and their limited services model. For those new to the discussion, Redfin is a newer web-based real estate company courting buyers with this attractive proposition: “You find the home, local Redfin agents negotiate and close. 2/3rds commission refund”. Now, commission concessions are nothing new, nor are limited services brokerages. Redfin takes this one step further into dangerous territory, however, by washing their hands of many of the duties and much of the liability typically associated with buyer representation.
In my last installment, I focused on agency and representation issues associated with Redfin’s transfer of showing responsibilities to the listing agent; in short, the “everyone else do most of the work, and we will give the buyer some of our money” model. In Perfect Escrow Land, a place we rarely visit, a smooth and successful transaction may result under this model. More often, however, “stuff” happens. This time, I want to touch on the implications of limited service when things get ugly. I think the best way to do this is to share some stories, my own very real stories, of what can go wrong. And keep in mind, these tomes are just from my story bag, encompassing many genres: Adventure; Humor; Horror; but, all non-fiction. I am certain many agents out their have their own tales that would make even better reading, and that is just the point. So, Once Upon a Time…
- A termite inspector reconsiders his career choice. Well into escrow and during the pest inspection, it is discovered that an extended family of racoons has taken up residence in the attic, apparently during the Eisenhower administration, ultimately requiring an army of brave men (I must assume they were men) to don haz-mat suits and scoop, clean, reinsulate, etc… Damages to the home were in the thousands; the “shrine” that my client subsequently built in my honor, complete with ceramic racoon and prayer candles – Priceless!
- Kids say the darnedest things. Three days before scheduled close of escrow, the seller informs all that their son is emotionally distraught over the impending move and that they, therefore, will not be selling – or moving. The buyers, meanwhile, have sold their home and are renting back from the new owners.
- Til close of escrow do us part. Five days prior to close of escrow, buyer wife finds out that buyer husband has a girlfriend. Buyer wife calls agent on the way to buyer attorney to say that she never wants to see buyer husband or seller home again. “We are in breach of contract. Get over it”.
- In sickness and in health. Little clues during escrow lead agents to question the seller’s capacity to enter into contract much less legally transfer property. These include locking the deadbolt from inside the home and denying access during scheduled appointments, reports from neighbors of all-night screaming episodes (“get out, you murderers”), and the calendar magnet with the heads of the agents (that would be us) chopped off.
- For richer, for poorer. Despite loan prequalification, verification of funds, and all of those other silly things we do as agents, closing date arrives, and only then do all parties learn that buyer has no cash to close. Meanwhile, the Seller has moved.
- The sky is falling? Thankfully, no, but it could have. During the buyer inspection, it is noted that the framing truss has been “compromised” (as in, cut into pieces in about five places) to allow the installation of some lovely yet unpermitted skylights. Got outrageously expensive structural engineers and general contractors? Bring ’em on.
- Oh, and another thing. Seller finds buyer for home. Buyer is contingent on sale of their home, but home is in escrow. Buyer home falls out of escrow two weeks into the transaction. Did we forget to mention that the previous owners were involved in a murder-suicide… related to the meth lab in the garage? Was that important?
And, finally, for the Redfin “seller”, the one Redfin tells on their website, “You’ll do much better than most agents at selling your home, because you know the property better than anyone else”.
- Bottoms up! During an open house, listing agent meets nice man who is thinking of moving into the area. As another couple enters, listing agent notes that nice man does a bee-line upstairs. Agent, being of the crime-fighter ilk, removes shoes, tip-toes to the master bath, and finds nice man drinking the codeine cough syrup. Agent chases man out front door but is unable to get a license number. Police refuse to take report because open house is considered an “invitation” to visitors. Kids, don’t try this on your own. Steve will yell at you for being stupid.
- I saw the home (and your picture) in an ad. Agent takes call from man very interested in seeing a listing. No problem. It is vacant and easy to show! Agent makes nice-nice with man on the way into the home. Man sees that vacant home is not so vacant today; the carpet cleaners are in full-swing. Man runs at Mach I speed out front door. Guess he didn’t like the sense of entry. Steve yells at me again. 🙁
What’s a Redfin buyer, or seller, to do?