Not sure if my realtor made an honest mistake or if he was trying to sell a house.

Asked by Railover, Richmond, CA Fri Aug 3, 2012

While viewing a house with my realtor I asked him in the in law unit was legal. He replied that it was a legal unit. I did some research and it turns out the unit is not legal. When I advised my agent it was not a legal unit, he replied that was not disclosed to him. I would think its Real Estate 101..not to reply that it was legal. Can I get some feedback from some other realtors on how they would have answered that question. Not sure if Im being too picky or if my agent might be too inexperienced for me to feel comfortable with him.

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The Medford…, Agent, Fremont, CA
Mon Aug 6, 2012
Without knowing the specific buyer’s agent and getting their input on this, all we have is speculation.

Here are a few probable scenarios:

1. The buyer’s agent may have answered off the top of his head without verifying any facts.

If this is the correct scenario, while I would certainly question the agent’s judgment in responding thus to your question, I would not automatically apply a label of “dishonest” to him. “Ill advised,” definitely. “Not wise” would also fit.

As for trying to sell you a house … of course he’s trying to sell you a house …

2. The buyer’s agent may have been reading the MLS data sheet he had with him and simply parroted what was on the sheet.

In that case, had it been me, I would have said, “The listing agent states that it is a legal suite. However, it is in your best interest as a buyer to verify this with the local building officials. Here is their phone number …” (I carry the phone numbers to most Bay Area Building Departments in my phone)

3. The buyer’s agent may have been deliberately misrepresenting the facts to sell you a home, knowing it could open him up to a lawsuit for misrepresentation of facts … (or he may not have known it either, if he is a rookie …)

If you can prove this either way, get another agent.

Whether or not it was listed in the MLS as a legal unit, we advise all of our buyers to check with the local authorities. In reality, and MANY buyers do not understand this, Realtors are not allowed to disclose many facts about properties – including neighborhoods, schools, crime rates etc. It’s called steering.

NO STEERING ALLOWED: 3 Important Facts To Know As A Buyer…

Don’t Get ‘Steered’ in the Wrong Direction…

In addition, it is the responsibility of the buyer (NOT THE AGENT) to verify facts about any specific property. Here’s how it works:

• The listing agent has a responsibility of disclosing all known facts as given by the seller and as personally known,

• The buyer’s agent has the responsibility of conveying all disclosed facts and disclosing any additional facts as personally known …

• The buyer has the responsibility to prove/disprove any or all of it.

It’s called “caveat emptor” … and it’s been a very real issue since the phrase was coined in Latin …
1 vote
Tomi Thomas, Agent, Oakland, CA
Sun Aug 5, 2012
My answer would have been, "I can only tell you what has been disclosed, but we need to research it thoroughly to make sure the information is accurate. Let's look at the written disclosures to see what the seller has actually stated and verify with the building department to make sure all info is accurate and understood fully."

Listing agents, sellers, and buyers agents can make honest mistakes. Subterfuge is rare, but it can happen, and you are right to double check any info to your own satisfaction before you purchase. If you start from the assumption that anyone can make a mistake , and investigate everything for yourself, you will be far better served. in any property you end up buying.

I wouldn't say his answer alone is cause for changing agents. It is, however, important to trust your agent, AND to not rely exclusively on their advice, either. You should feel that you are working as a team to discover any and all facts about the home that may affect your decision to purchase. If you are feeling uncomfortable about experience, talk it out with your agent. It's okay to ask how long they have been in the business. If you continue to feel uncomfortable, be honest, and tell them what doesn't work for you. You may both feel it doesn't work, and if this is the case, it's better to move on early than to drag it out.

I think how you deal with the difference about the permit status of in-law from a strategic standpoint is worth discussing. There are lots of non-permitted spaces out there in our market of older homes, so this is not uncommon to see, and you may run in to it again. You may feel more comfortable if you change the language you use from "legal" to "permitted". And by "permitted" I mean that the work was done based on obtaining a permit from the local building department and completed with approved plans. There is a distinction to be made between work that was done with a permit and work that was done to code. It may have been done to code, even if the owner did not pull a permit. (And, the work may have been done by a prior owner than the current seller.) Most cities don't come looking for non-permitted work, unless a complaint is filed, but they have recourse in the form of penalties they can inflict if they become aware of a non-permitted structure or modifications, or the non-permitted use of a structure. These penalties range from fee and instructions to correct and make legal, or removal of the offending modifications.

Since you cannot use the income from an in-law unit to qualify for a loan, (it has to be a legal duplex to use the income), it becomes a question of 1) what potential issues are created by an non-permitted in-law space, and 2) how does it affect the real value of the property.

(You probably already know that an in-law unit can be legally recognized as an in-law, but that does not make the property a duplex. In order for the income to help with the loan, it has to be recognized in the assessors record as a duplex.) If it is disclosed by the seller as a permitted space, then it is legitimate for you to submit your offer based on that disclosure. If you determine during your inspections that it was done without permits, or the permits were never finaled by the building department, then you have grounds to have a further discussion about the actual valuation before you remove your inspection contingency. If there are multiple offers, and it is a property that you really want, you might be better served to write the offer based on the seller disclosures, and re-evaluate based on discovered facts. If you do not have to compete to get your offer accepted, then you can discuss with your agent whether the better strategy is to present the offer based on their disclosures and renegotiate based on discovery, or to investigate up front and provide that info along with the offer. Who the seller is and why they are selling is an important factor in that discussion, and you want to tailor your strategy to the situation.

Hang in there. Buying a home is stressful, there will be lots of things to investigate. Keep asking questions, it's the very best mechanism for getting educated.

Each of these scenarios has to be managed based on the tangible info available.
1 vote
Annette Law…, Agent, Palm Harbor, FL
Fri Aug 3, 2012
All homes should be sold in exactly the same manner that the banks are allowed.
In such an environment, the buyer is very aware they must verify those things that are important to them.

As it stands, the seller is placed is a situation to prove what they did not know.
That is an impossible situation.

For those who distrust, there can be a conspiracy found in every shadow. Most conspiracies, however, are vain imaginings.
1 vote
Cindy Davis, Agent, San Diego, CA
Tue Aug 28, 2012
If your agent did not know 'for sure' - he should have just said he'd check it out and let you know.

That said, I'm not sure I would be a decision to use or fire this person based on that one item alone. How is your relationship otherwise? Do you trust the person? Do you feel comfortable talking to him ? Is he somewhat experienced or brand new? These are are questions I might suggest you answer in order to clarify what is right for you.

Take care.
0 votes
Richard and…, Agent, Fresno, CA
Tue Aug 28, 2012
First of all Real Estate Agents are in business to sell houses! Second, if by "LEGAL" you mean permitted then clearly you discovered how easy it is to determine if it is legal. Third, if he didn't know he should of said so and found out. And fourth, If your not comfortable with this agent find a new one. GOOD LUCK.
0 votes
Jodi Selene, Agent, Albany, CA
Fri Aug 3, 2012
While it's true that a Realtor - and any professional - should research before answering a question like "Is it legal?" it's also true that we Realtors are human and we sometimes make errors.

A question of legality ought to be answered with something more like, "Well, it's listed as a a legal rental unit, but let's make sure and check the records."

If you're comfortable with the person you've chosen to work with in all other aspects, I would suggest talking with him and discussing the answer he gave and asking that he take more time to give you a more thorough answer, after doing some research.

Rest assured we work very hard and, in general, we try to provide the best service to our client that we can. It doesn't serve anyone to give incorrect information just to get a client into contract on a property.

If there are other 'red flags' about the Realtor you're working with and this is just on symptom of a larger problem of not having good communication with him, then - yes - maybe it is time to explore other options.
0 votes
Bill & Elijah…, Agent, Oakland, CA
Fri Aug 3, 2012
If Idon't k now the answer to a question I usuallly respond by saying "I don't know, lets find out".
I hope this is helpful.
0 votes
Alan May, Agent, Evanston, IL
Fri Aug 3, 2012
Sounds like he was just parroting what he'd learned from the listing or the listing agent.

A better answer might have been "the listing says it's legal".
0 votes
Steve Quinta…, Agent, Albuquerque, NM
Fri Aug 3, 2012
1. I would have answered your question based on my knowledge of the in-law unit ordinances in that municipality. If I did not know that municipality's ordinances I would have said I need to check on that or I would have asked you to put it on your list of things to check. When I say check on something, I mean trace the ordinance and the particular unit back to their original sources and provide you with that info so you could make a decision.

2. A broker may not know all in-law ordinances for all municipalities, but it is helpful if a broker knows the in-law unit ordinances for the broker's home municipality.

3. It is not helpful for a broker to blurt out the answer that sells the house if that answer is not correct. Having original source authority to an answer is the best policy. In your case original source authority might be the ordinance for the construction of in-law units or the local building code.

4. A broker's actions expertise should be on par with the cost of the investment at stake. Real estate investments run into the hundreds of thousands of dollars, therefore the broker expertise should be substantial.

5. I could be the answer to your question requires a municipality letter, permit, a survey, building inspection or other action requiring a third party's input or expertise. A broker should bring in third parties when extra expertise is required.

6. There is no shame in spotting an issue that requires additional research and working through the answer. A willingness to do that shows a commitment to client welfare and respect for the investment at stake.
0 votes
Suzanne MacD…, Agent, Morristown, NJ
Fri Aug 3, 2012
Typically a seller will not advertise the in-law suite unless it was done with proper permits and so on. It is very difficult, in fact impossible, to answer your question with 100% accuracy unless the agent actually went to the local building authority and asked to see the closed permits. Even then, depending on when the in-law suite was installed, it may be impossible to tell because so many times permits were not needed or the concept was new when these things were done.

As realtors we have to assume our colleagues also knew what they were talking about when they took the listing and inputted the information into the MLS. We also have to be able to rely on our clients being honest and up front with us. Sometimes it is easy to tell that we have been deceived, such as is the case if the foundation is cracked and it is evident to the naked eye. Other items are not so easy. My own feeling is, you should give the agent a break. The question was asked during a home tour. Perhaps your agent should have said, "I am not sure but we can certainly find out easily enough" but my guess is he was relying on the listing agent to have accurate information.
0 votes
Thank you for the reply. The listing agent did not list it as an inlaw unit. My agent refered to the area as an inlaw unit. On the listing it stated bonus room with kitchen, bath and separate entrance... which means not legal to me.
Flag Fri Aug 3, 2012
Fred Yancy, Agent, Woodstock, GA
Fri Aug 3, 2012
This disclosure statement is a disclosure of the condition and information concerning the property, known by the Seller. Unless otherwise advised, the Seller does not possess any expertise inconstruction, architecture, engineering or any other specific area related to the construction or condition of the improvements on the property or the land. Also,unless otherwise advised, the Seller has not conducted any inspection of generally inaccessible areas such as the foundation or roof. This statement is not awarranty of any kind by the Seller or by any Agent representing the Seller in this transaction, and is not a substitute for any inspections or warranties the Buyer may wish to obtain.

I do not beleive that the agent was trying to mislead you. We rely on the homeowners to complete the seller's disclosure to the best of their knowledge. Not sure why you think that the in-law suite is not legal. Did you go to the local building permittting office to see if a permit was pulled to construct an addition? This addition could have been constructed prior to the current homeowner's knowledge or that homeowner built the addition under the impression that they had followed local laws. Bottom line I doubt anyone was purposely trying to mislead you.

Good research on your part though. Good luck in your home search.

Fred Yancy, Broker
Crye-Leike Realtors
(678) 799-4663
0 votes
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