Top 10 property conditions that most often lead to disputes in a real estate transaction

1. P R E S E N T S
Minimize Your RiskMinimize Your Risk
Maximize Your EarningsMaximize Your Earnings
Understanding and Recognizing
the Top 10 Property Conditions
that most often lead to disputes in the
Real Estate transaction
*According to the NAR Legal Scan/Legal Pulse

2. 2016 NAR
Profile of Buyers & Sellers
Characteristics of Home Buyers
 First-time buyers made up 35 percent of all home buyers,
an increase over last year’s near all-time low of 32 percent
 The typical buyer was 44 years old for the 3rd
straight year
The median household income rose to $88,500 an increase
of $2,500
 66% of recent buyers were married couples
17% were single females
 7% were single males
 8% were unmarried couples

3. 2016 Profile of Buyers & Sellers
83% bought single family homes
The typical home purchased was 1,900 square
feet, three bedrooms, two bathrooms, built in
1991
84% found heating and cooling costs were
important environmental features
Buyers typically searched for 10 weeks and
looked at a median of 10 homes
88% of buyers purchased their home through a
real estate agent or broker

4. 2016 Profile of Buyers & Sellers
Home Sellers and Their Selling Experience
 The typical home seller was 54 years old, with a median
household income of $100,700
 For all sellers, the most commonly cited reason for selling their
home was that it was too small (18 percent), followed by the
desire to move closer to friends and family (15 percent), and a job
relocation (14 percent)
 Sellers typically lived in their home for 10 years before selling, an
increase from nine years in last year’s report
 Eighty-nine percent of home sellers worked with a real
 estate agent to sell their home
 The final sales price was a median 98 percent of the final listing
price
 Recently sold homes were on the market for a median of four
weeks

5. FACT:FACT:
80% of claims against
brokers E&O insurance
are due to property
related conditions

6. What is the
NAR Legal Scan and Legal Pulse?
 Legal Scan Published every two years by
National Association of Realtors
 Legal Scan discontinued in 2013
 Replaced with Legal Pulse

7. What is the
NAR Legal Pulse?
 Quarterly newsletter - analyzes current legal trends
in risk management that impact real estate
professionals (nationally)
 Tracks cases and statutes
 Identifies emerging issues and trends
 www.realtor.org

8. 2015 Legal Issues
by Major Topic
____________________________________________________________
Topic Cases
Agency 74
Property Related Conditions 49
RESPA 40
Fair Housing 32

9. Property Condition Issues

10. Caveat Emptor
The doctrine of “Buyer Beware” is gone….
Replaced by Agent Beware!Replaced by Agent Beware!
Realtors are held to a higher standard
“What do you know about the property” has been
replaced by “What should you know about the
property!”

11. Today’s AgendaToday’s Agenda
• Help you develop an awareness of what to
look for (without turning you into home inspectors)
• Highlight warning signs of possible defects
• Overview of Top 10 Property Conditions that
most often result in disputes

12. Why is this information important?
Happy, well informed clients, mean more
referrals (and no disputes)
More referrals = more earnings
Minimize your risk by having a greater
awareness and understanding of adverse
conditions

13. Top 10 Property Conditions
Water
intrusion/Mold
Structural Defects
– flooring/walls
Insects/vermin
Septic/sewer
Boundary issues
HVAC
Plumbing
Roof
Environmental
Issues
Electrical

14. Mold/Water Intrusion#1

15. Mold & Water Intrusion
What’s the problem?

16. Mold & Water Intrusion
Is this a problem?

17. It’s Just A Small Window Leak…

18. How Bad Could It Be?

19. Warning Signs of Water Intrusion
Poor grading
Inadequate ventilation
in crawlspace or attic
Cracks in foundation
Efflorescence
Roof stains in attic
Missing roof shingles
Stains on ceilings
Newly painted
foundation/floors
Water stains
baseboard/furniture
legs
Mold
Sump pump
Downspout not
extended
Window rot

20. Structural Defects/Walls & Floors#2

21. Walls/Floors

22. Deck Framing & Support Systems

23. Structural Defects
Some defects are obvious….

24. Structural Defects
….and some are not!

25. Structural Defects
A closer look

26. Warning Signs of Structural Issues
Sloping or sagging
floors
Overly snug fit to floors
and windows
Cracked tile floor
Excessive concrete
cracking and
separation
Alterations without
permits
Sagging beams
Funky
supports/columns
Stair riser/tread size
Crushed sills/joists
Suspicious homeowner
repairs

27. Insects/Vermin#3

28. Bats & Birds Nesting in Attic

29. Powder Post Beetle Damage

30. Termite Mud Tubes & Damage in Wood

31. Warning Signs of Insect Damage
• Termites:
 Mud tubes
 Damaged wood
 Soft spots or blisters
on drywall
Carpenter Ants:
 Frass
 Smooth channels along
wood grain
 Damaged wood
Powder Post Beetles
 Frass
 Small circular/oval holes
 Meandering holes
through wood
Carpenter Bees
 Staining
 Bees hover around
eaves, deck, fence
 Round holes

32. Septic/Sewer#4

33. Sewer & Septic
Where does the water go?
Where does this water go?

34. Warning Signs of Septic/Sewer Issues
Slow sink drains
Slow drainage when flushing toilets
Odor in yard – septic breakout
Internal odors
Washing machine (grey water) drained to outside

35. Plumbing

36. Plumbing
The latest in designer plumbing!

37. Some Things Are Readily Apparent

38. Some Not So Obvious

39. Warning Signs of Plumbing Issues
Loose and missing
grout and tiles
Loose toilet
Safety glass at tub or
shower enclosures
Water odors (sulfate)
Aged piping
Leaking drain traps
Reduced water pressure

40. Roof

41. Roof transition Exposed Flashing
Roof Flashing

42. Defective Asphalt Shingles

43. ICE DAMS!!!!

44. Warning Signs of Roof Issues
Age of Roof
Rusted Flashing
Missing, cupped or curled shingles
Stained ceilings
Cracked or missing tiles
Buckets in the attic

45. Environmental Issues
Radon (in air and water)
Asbestos
Lead
Underground Storage Tanks

46. Warning Signs of Environmental Issues
Radon –mitigation system not functioning
Asbestos – wrapped pipes, loose insulation,
vermiculite, aged floor, 6 x 6 ceiling tile
Lead – 1978 or before
UST – cut off fuel lines, new gas, evidence of prior
oil tank, propane

47. HVAC

48. Warning Signs of HVAC Issues
Aged units
No maintenance tags
Odors in house or near unit
Ineffective function – not hot enough, not cold
enough

49. Electrical

50. Panel, Condition & Location Problems

51. Warning Signs – Electrical Issues
Outdated Service size
Panel issues
Exposed romex
Open junction boxes
Extensive use of electrical cords
Aluminum wiring
(primarily used from 1965 – 1974)

52. Best Practices…
Make sure your client understands his/her obligations
under the contract
Explain that he/she has a right to bring in specialists to
investigate the condition of the property
Do not give advice beyond your area of expertise
Point out potential trouble spots and recommend a
Home Inspection
Document everything in writing

53. Minimize Your Risk
Make sure the Inspection Companies that
you recommend have:
Errors & Omissions Insurance
Fully licensed in CT and NY
Strictly adhere to the Standard of Practice
Stand behind their inspections
Offer comprehensive inspection agreements

54. Thank you!
We look forward to working with you!
Questions???