Have you ever responded to a potential buyer’s question about a property and then thought, “Hmm, maybe I’m not too sure about that”? Unless you know the answer without a shadow of a doubt, it is always best to be safe by recommending an inspection so that you don’t misinform potential buyers. Even if you thought you were answering honestly, you could be sued for being deceitful.

Well Inspection Could Have Prevented Day in Court

A Real Estate agent listed a home for sale that received its water supply from a well. According to the agent, the seller represented that the well produced an adequate water supply for the buyer interested in purchasing this residential property for his family.

Problem
The water supply the well produced was probably sufficient for the needs of the seller, but the buyer’s family was much larger than the seller’s. After taking possession of the property, the buyer quickly discovered that due to the increased consumption from bathing and laundry, the water production from the well could not support the functional needs of the buyer. The water production diminished and it became necessary to have another well drilled.

Mistake
The agent made an assumption of what the buyer’s needs were instead of recommending the buyer have the well independently tested.

Result
The buyer filed suit against both the agent and the seller of the property.

Prevention
Real Estate professionals often represent well water flow to be adequate for a buyer’s needs, especially when the source of the statement comes from the seller. However, it shouldn’t be assumed that the buyer will necessarily agree. A yield of 5 gallons per minute may be acceptable for one person, but not another. In making representations based on assumptions, you may be putting yourself at risk for litigation should your representations be perceived as being untruthful at a later time. If water production tests yield 5 gallons per minute, that should be what is represented.

Recommend the buyer hire an independent source to verify the information. This will go a long way in removing any perception of deceit and also transfer the risk of litigation to another party. Additionally, a well inspection may also lead to the detection of other environmental hazards, such as underground storage tanks. Contaminated water can also involve significant expenditure if clean water has to be delivered to maintain the property’s legal occupancy.

Do you have a similar story involving a time when you should have recommended an inspection rather than answering to the best of your knowledge? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!

If you have any questions about Pearl’s Errors & Omissions Insurance for real estate professionals, give us a call at 800.447.4982—whether you’re looking for a new E&O policy or have questions about your current one. We’d love to hear from you!

You can also visit www.pearlinsurance.com/eo to find out more about our quality Errors & Omissions program, including policy features, risk management tools, and much more.

Many Errors & Omissions claims can possibly be avoided through simple review of paperwork. Be sure any time you are listing a house to check your facts on the property so that you don’t misinform potential buyers. Lawsuits can happen any time, even after half of a year—as in the case of this real-life claims scenario!

Improper MLS Listing Creates Stir with Local Board

A Real Estate agent listed a home for sale and published information in the MLS indicating that the property was connected to the municipal sewer system.

Problem
This particular agent had listed and sold the same property five years earlier and knew it was serviced by a private septic system. However, when completing the MLS form, he inadvertently marked the wrong box. The eventual buyer of the property discovered the mistake approximately six months after taking possession when the septic system failed. The buyer alleged that the agent deliberately misrepresented the type of waste system in order to obtain a commission from the sale.

Mistake
The agent failed to double check the information that was to be entered into the MLS.

Result
The buyer filed suit against both the agent and the seller of the property. The local real estate board also took disciplinary action against the agent.

Prevention
If the agent took a moment to carefully review the information in the MLS, the error would have been avoided. Being an experienced agent in the community, the agent should have realized that there was no municipal sewer system where the property was situated. Also, the MLS information he completed in the sale five years earlier correctly denoted that the property was serviced by a septic system. Unfortunately, the problem was compounded by the fact that the hard pan soil surrounding the house could not accommodate another septic system. A new above-ground system had to be installed, which required frequent pumping. The property also had to be re-landscaped in order to disguise the new septic system. A simple clerical error on the part of the agent resulted in a settlement in the tens of thousands of dollars.

Do you have a similar story involving MLS listing errors to share with us? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!

If you have any questions about Pearl’s Errors & Omissions Insurance for real estate professionals, give us a call at 800.447.4982—whether you’re looking for a new E&O policy or have questions about your current one. We’d love to hear from you!

You can also visit www.pearlinsurance.com/eo to find out more about our quality Errors & Omissions program, including policy features, risk management tools, and much more.

For years, Pearl Companies embraces the opportunity to raise money for the United Way during our Spirit Week celebration just before Halloween. Even though it was a difficult year financially for many people, our associates truly went the distance—this year’s fun-filled events raised a grand total of over $15,000. Dozens of Pearl employees have also joined United Way to volunteer regularly.

Facts about United Way:

• On average, more than 1,100 people use United Way-funded services every day.
• More than 40% of those helped are under the age of 18.
• The United Way funds 112 programs at 45 member agencies.
• Money raised throughout the Heart of Illinois United Way campaign stays in our community, but Pearl representatives who live outside of these counties were able to allocate their donation to their local United Way.

In an interesting podcast from National Association of REALTORS (NAR), Chief Economist Lawrence Yun sheds light on the 2010 real estate market forecast. Yun estimates that 2 million Americans will take advantage of the first-time homebuyers tax credit and that 2.6 million families will utilize the “move-up” tax credit. In addition, he believes that existing home sales will rise by more than 20% in the first half of 2010. Good news for the economy and the real estate profession!

Listen to the podcast here and let us know what you take away from it. We hope it’s good news for REALTORS!

Sometimes the past is one of the best learning tools around! Use the following Real-Life Errors & Omissions Claim Situation involving square footage and documentation to avoid a similar legal showdown happening to you in your everyday real estate career. And always have a good Real Estate E&O Insurance policy in place to protect you in case you find yourself in the middle of a discrimination suit.

Forgotten Tax Installment Creates “He Said, She Said” Situation

A home was listed for sale. Among the information published in the MLS, the agent listed the home’s square footage and stated only one installment of taxes rather than two.

Problem
The buyer claimed the listing agent overstated the square footage of the home. He also claimed that although the agent acknowledged the error on the taxes before closing, he felt he was forced to proceed with the closing. He believed the agent deliberately chose not to disclose the information to secure the sale. If he had known of the additional tax installment, he would not have bought the property.

Mistake
The agent denied any problem with the square footage issue, but acknowledged the error on the taxes was an oversight. The agent should have reviewed the listing information before publishing the statistics in the MLS.

Result
The buyer filed suit against the agent for $3,000.

Prevention
Depending on the structure of the home, even professionals can easily disagree on measurements of square footage. That’s why many firms and agents today are adopting the philosophy of not disclosing square footage in their listings. The home is available for the potential buyer’s own measurements and the risk of argument over size is prevented.

As for the tax issue, the agent covered this openly with the buyer who chose to proceed without further questions. Had the agent documented this conversation, showing the original notification of the error in writing, the agent could have avoided the “He said, she said” issue and leaned on his documentation for defense.

Do you have a similar story involving an error in square footage or lack of documentation to share with us? Send us your learning experience or just let us know what you think about this one! Just leave a reply below!

If you have any questions about Pearl’s Errors & Omissions Insurance for real estate professionals, give us a call at 800.447.4982—whether you’re looking for a new E&O policy or have questions about your current one. We’d love to hear from you!

You can also visit www.pearlinsurance.com/eo to find out more about our quality Errors & Omissions program, including policy features, risk management tools, and much more.

Pearl Insurance recently won five Gold and Silver Awards in the 2009 Professional Insurance Marketing Association (PIMA) MarkeTTech Marketing Methods competition. The annual contest highlights the best work in the insurance marketing industry and recognizes excellence in marketing campaigns and models.

A forum for leaders in the insurance direct marketing industry to craft strategic relationships, develop business opportunities, and hone their expertise, PIMA is the nation’s premier association for insurance marketers. It consists of third-party administrators, insurance carriers, and other business partners involved in the direct marketing of insurance products in the affinity and association marketplace. Going against some of the biggest names and budgets in the insurance marketing industry in this distinguished competition, Pearl earned top honors for every entry they submitted.

The Pearl Marketing Group, Affinity, and Program Business teams worked together to produce these noteworthy campaigns. The superior results responsible for the win were a product of their highly targeted mail campaigns for generating leads, selling insurance products, and cross-selling to retain customers. Products involved in the honored entries include Civil Engineers Professional Liability Insurance for the American Society of Civil Engineers (ASCE), Group 10-Year Level Term Life Insurance for ASCE, Disability Insurance for the Civil Service Employees Association (CSEA), Level Term Life Insurance for the New York State Society of Certified Public Accountants (NYSSCPA), and Lawyers Professional Liability Insurance for attorneys nationwide.

“That Pearl consistently brings home high honors at PIMA’s annual MarkeTTech Marketing Methods competition is a testament to our talented staff’s ability to work as a team to drive innovation with our marketing models while achieving superb results,” says Mike Murphy, Chief Sales and Marketing Officer at Pearl Companies. “This year, Pearl’s resourceful group of marketers has brought home three Gold Awards from PIMA’s annual competition, as well as two Silver Awards, winning deserved recognition for each entry they submitted. We’re very grateful to have this award-winning group and to enjoy the results we see from their work.”

Pearl has employed four former national PIMA presidents, including President/CEO Gary Pearl and Executive Vice President/Chief Sales & Marketing Officer Mike Murphy. Founder and Chairman John P. Pearl was also honored with the prestigious PIMA Legend Award in 1999. For additional information on Pearl’s MarkeTTech Marketing Methods awards or their history with PIMA, contact their Director of Marketing, Sharon Harman, or visit www.pearlcompanies.com.

Tip 8 of 12 Risk Reduction Techniques for your daily real estate practice

Controlling your Errors & Omissions should be the mission of all real estate professionals. That’s why we’ve compiled a list of 12 risk reduction techniques you can use to minimize your legal liability and maximize your earning potential.

Tip 8: Review the Code of Ethics regularly.

As a REALTOR®, you have agreed to abide by a strict Code of Ethics to help maintain the highest standard of integrity among real estate professionals. To find the most current Code of Ethics and Standards of Practice, visit the National Association of REALTORS website at www.realtor.org.