GOLDEN VALLEY, Minn. - The Twin Cities housing market is hot again, but sellers beware. While homeowners are opening their doors to potential buyers, those strangers could be causing unanticipated damage.
Since the start of the 2013 spring selling season, at least two metro area homeowners have had to shell out thousands of dollars to fix damage they say was caused when a potential buyer was looking at their home. These sellers are likely not alone.
But when it comes to selling a house, homeowners don't have much of a choice. They must invite people inside in hopes that the traffic from potential buyers leads to a sale. According to the Multiple Listing Service, a service that tracks most homes on the market and provides information about listings to potential buyers, about 15,000 houses were up for sale in the 7-county metro area during the first week of August 2013.
Edina homeowner Joel Anderson put his family's home on the market this spring and experienced several showings after just a week. Anderson says his home was almost always different in some way after a showing.
"You come back after every showing, sometimes the house is lit up like a Christmas tree, sometimes it's back in the shape you left it in," he says.
But after a day in which three agents showed Anderson's home to three different potential buyers, he came back to check on the house and found water all over the second floor.
Anderson says someone turned on the steam shower in the master bathroom and didn't turn it off, transforming Joel's second floor into a steam bath. There was so much moisture, water was dripping everywhere and even seeped into the walls and insulation.
"The entire upstairs was almost like you were walking into smoke except it was steam," describes Anderson. "I was in shock ... Words can't even describe the situation I walked into. I immediately turned off the steam shower, opened up all the windows, all the doors and then began the process of restoration."
Anderson says the steam shower was probably running for four days and since no one else had been in the house except for real estate agents and would-be buyers, he knows it happened during a showing. The entire second floor had to be gutted and his home was taken off the market during prime-selling season.
"It's a lot of money and it's a lot of time ... It's a lot frustration and it's a lot of time missed not being on the market," says Anderson.
Anderson says the cost of repairing the damage is in excess of $50,000. Much of the cost will be covered by his homeowners' insurance policy. However, after paying his insurance deductible and accounting for depreciation, he says his out of pocket cost for the remodel is about $13,000.
He hopes his story can be a lesson for other sellers. Anderson and his family were no longer living in the house when it went on the market, so he wasn't there every day to check on the property. Real estate industry experts say checking on the home after every showing is critical.
"It's a big un-forecasted remodel project," says Anderson about the damage to his home.
KARE 11 and Minnesota Public Radio News have learned that Joel is not alone. Another homeowner we spoke with was left with a flooded basement after someone took the cover off the sump pump during a final inspection. That homeowner was able to settle on the cost of damage with both the listing and buying agents.
There are also many stories online about valuables being stolen during showings or open houses. And the Minnesota Department of Commerce has yanked the licenses of at least two real estate agents in five years for doing things in other peoples' houses they shouldn't have.
Charles Lindley's license was revoked based on allegations he fabricated a showing to steal Vicodin from a client's home.
And Steven Curtis Skar's license was revoked when he accessed a listed property and "engaged in non-real estate activities for over four hours" without permission. In a subsequent lawsuit, the homeowners accused Skar of using their home for unauthorized "sexual escapades."
"Most real estate agents are good agents, they do a terrific job, give great value to their clients, but we do see a fair number of cases here where something has gone bad," says Minnesota Commerce Commissioner Michael Rothman. "When you own a home and you are selling it, you ask your agent to be responsible and that agent is responsible for your property. I'm handing it over to you. You're responsible for that property."
HOW CAN SELLERS PROTECT THEIR HOMES?
If someone causes damage, the most difficult task is figuring out who did it.
Tim Hyde has been selling houses with Coldwell Banker Burnet for more than a decade.
"Our job is to get people in the door and to show the house in its best light," says Hyde.
Hyde adds that hi-tech lock boxes can keep track of who's in your home and when by creating an electronic signature.
"It's a valuable thing to have to know who's in the property at what time ... I think it's very important to follow up on showings," says Hyde. "To know if the buyer is actually in the home."
Hyde also says it's up to the agent to watch potential buyers closely, during a showing or while hosting an open house, where the seller has entrusted the home to the agent.
"You just have to treat it like it's your own home," says Hyde.
But letting a stranger into your home is always a risk.
"The reality is everybody's exposed at all times," says Twin Cities attorney Brad Boyd, who is an expert in real estate matters.
He says that when you let someone into your home for a showing or open house, that person is essentially a guest and the homeowner, to some extent, has assumed a level of risk by inviting the guest in.
"You knock over a vase by accident, you tell them about it," says Boyd about what potential buyers or agents should do if something goes wrong in a seller's home. "I think being cautious and pro-active can go a long way in these circumstances. I think every time there is a showing, somebody should be following up, whether it's the seller or the listing agent."
Boyd says that while cases of extreme damage or theft are rare, it if happens the homeowner should contact his or her agent and insurance company. If you can identify the culprit, you may be able to settle or sue. And if you suspect theft or vandalism, call police.
"When somebody comes into your home, the presumption is they're going to be responsible. They're going to look at your home just within the scope they've been granted access," says Boyd.
As for Joel Anderson in Edina, he never could figure out who turned on the steam and no one owned up. Still, he's looking on the bright side. With a complete remodel, his house will be even better for its second round on the market.
"It'll be even better than before. You're going to have brand new insulation instead of 1950s insulation, all new walls," says Anderson, but he warns other sellers, "Treat it as a home full of strangers and anything can happen."
1. Check your insurance policy before putting your house up for sale to make sure you have adequate coverage for anything that might happen. Minnesota Commerce Commissioner Michael Rothman says sellers should have insurance to cover losses regarding liability issues pertaining to injuries someone might sustain in the home, replacement value of the home, property damage and additional protection to cover valuables.
2. Ask your real estate agent to not only use an electronic lock box when listing your home, but also to be present during showings. An extra set of eyes and ears can be helpful.
3. Take a very close look at your listing contract to see that you are not signing away any of your rights if your home does get damaged. Many, if not all, listing contracts have an indemnification clause. The clause usually protects the listing agent from any damage that might occur during the marketing of a home unless the agent was somehow grossly negligent or acted in a way that led directly to the damage.
"If the agent is directly involved, responsible and accountable, they can be held accountable," says attorney Brad Boyd. "But if the agent had no idea what happened, it happened on somebody else's watch, the buyer or the buyer's agent damaged the property or allowed something to occur unintentionally, that doesn't automatically become the listing agent's problem. That's what the indemnification provision is about."
4. Look over your entire listing contract to understand your rights and responsibilities and those of your listing agent and/or broker.
5. Leave 'don't touch' signs in your home if there is something you want to warn a potential buyer about. Give your listing agent explicit instructions about how potential buyers and buyers' agents are to treat your home - i.e. turn off the lights after every showing. Make sure your listing agent passes on any special instructions to the buyer's agent.
6. Hire a reputable real estate agent. They have fiduciary duties in Minnesota and must put the seller's interests first. If you think that hasn't happened, you can always the Minnesota Department of Commerce.
"The most important thing is that consumers can protect themselves by getting the knowledge that they need by either doing the research, getting a good referral, but they should hire a good realtor and then make sure that they know their rights," says Commissioner Rothman.
7. From Attorney Brad Boyd:
- Secure/lock/remove valuables out of open sight
- Immediately notify your agent and/or the authorities of any problem that has occurred
- Listing agents can/should help maintain a record of anyone who has had access to the property
- Listing with a real estate agent can help ensure certain precautions can be taken (electronic lockbox, scheduled showings, etc.)
- 'For sale by owner' sellers = be careful about who you let into the property
- If it's an agent, obtain his or her license number and other contact/identifying information
- If a buyer does not have an agent, don't let him or her in without you being present or taking other precautions
- Once a showing is concluded, review the property to make sure things have been properly locked, shut off, etc.; for absentee sellers, make sure an agent/family member/friend does this on your behalf
1. Use common sense - when entering someone's home as a guest/prospective buyer, treat it with respect.
2. When you are in the home of someone you don't know, don't touch, move, or remove personal items that don't belong to you.
3. Be attentive to any children so that they don't injure themselves or cause damage to something outside of your sight/control.
4. If you need to check whether certain items function/operate properly (spa, sauna, irrigation system, gas grill, etc.), ask first or do it during the course of an inspection with appropriate attention given to ensure items are operated properly and shut off as necessary.
5. Don't turn on any faucets, lights, appliances or the like without being sure they are turned off.
6. Lock/secure any doors or windows you have opened.
7. Report any irregularity or issue you discover when in the home to the seller or listing agent.
1. Try to be the first one in and the last one out (to verify what lights have been turned on/off, doors are open/closed/locked/etc, faucets are turned on/off).
2. Remind buyer clients to be respectful and responsible for themselves and their children or anyone accompanying them on a showing.
3. Remind seller clients to secure, remove or store valuables in a safe place, and to be attentive to any changes, damage or items missing and alert the authorities or the agent/broker as appropriate.
4. Call to alert the seller (or the seller's agent) of any issues/concerns identified.
IF THEFT OR DAMAGE OCCURS
1. Buyers should notify seller of any item they know they may have damaged.
2. Agents who discover damage or missing items should promptly report the same to the seller.
3. Sellers who discover damage or missing items should contact any of the following (as applicable) - the seller's broker, the seller's insurance company, the authorities (police) and/or the seller's attorney (there may be civil or criminal remedies, depending upon the issue)
LINKS AND PHONE NUMBERS
Minnesota Department of Commerce - Real Estate Red Flags
Minnesota Department Commerce - Questions or Complaints:
651-539-1600 or toll free, 800-657-3602
Minnesota Association of Realtors
Minnesota Statute - Fiduciary Duties of Real Estate Agents
Minnesota Attorney General - Home Seller's Handbook
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