Off the Rails: A Good Deal Gone Bad, Almost...

Blog Post Image
Real Estate

From our July 7, 2020 newsletter:

A long time ago, while living in Chicago, I wrote this article for the Chicago Reader. Wireless Tapping: Go ahead. Say it on your car phone. Nobody's listening. That would be against the law.

The Reader is that city’s equivalent to Westword. The piece pertained to the not-yet-common use of cell phones. The conceit was that someone had borrowed a police scanner and started listening in on the private conversations of strangers. Which was easy enough to do at the time. Early cell phones were not yet digitally scrambled and rendered eavesdrop-proof.

That kind of eavesdropping was a crime, or so I was told. I confess now, 29 years later, the creepy listener on the wireless extension was me. The “this could happen” angle was a coy sort of supposition, a dodge of accountability deceiving no one. What was being said in private mobile chats seemed interesting at the time, as cell phones were quite new. It turned out the chats were often mundane, sometimes humorous and occasionally heart-wrenching.


All of that is a set-up for another wild supposition. Suppose a Denver real estate deal were to go down in the following manner. (This could happen!)

A buyer-side broker has clients shopping for a home. They’re a nice young couple, first-time buyers and impeccably well qualified. They get outbid a few times and then fall in love with a newly listed 4BR ranch. Their full price offer is accepted.

A home inspection is done by a professional inspection company. The report comes in with some 97 conditions in need of attention. They are mostly little things, but the report cites water intrusion in the crawl space and more than a dozen electrical hazards. A few dozen pockmarks on the roof, caused by hail, are flagged with arrows in photos in the report.

Separately, a roofer checks out the home. The roof’s 10-year old shingles are clearly damaged, he confirms. Around the pipe jacks are gaping holes big enough for entry by small animals. But it can all be repaired, he says, and any potential leaking can be forestalled for a while. 

The property owner happens to be home at the time of the roof inspection. The roofer is an amiable guy who speaks English as a second language. Not knowing whether he’d been called for a quick patch job or a full re-roof, he speaks these words to the owner.

“That roof is fine.”


The time comes for the buyers to present an Inspection Resolution. Their broker devises a proposal. The buyers will not ask for attention to any repair issues, except one. They will ignore even the most pressing of the other conditions such as water in the crawlspace. 

To “sell” the proposal, the agent itemizes the many improvements NOT being requested, and estimates the repair cost of each. There are 13 electrical issues (many labeled as hazards) including an outdated service panel. Other issues relate to plumbing, windows and doors, concrete, and water intrusion.  

Their total estimated cost is just over $14,000 (roughly the cost of a new roof). But the proposed resolution lists only one improvement: a roof replacement. The roof cost is likely to be covered by the sellers' home insurer, in light of the obvious hail damage. Everyone wins.  What could go wrong?


“That roof is fine.” 

That sentence, tossed off casually by the roofer, comes back to haunt the buyers. As negotiations unfold, the listing agent repeats it often, adding, “Your own roofer said so.”

“Yeah but…” 

The buyer’s agent counters in various ways. Fine for whom?  It may be fine (after repairs) for a very risk tolerant buyer wanting only assurance of a leak-proof, squirrel proof cover over their heads for the immediate future. But for this particular couple, soon to be married and seeking to avoid other major expenses, that 10-year old hail-damaged roof is not fine at all.

“There is no way they’re replacing that roof.  It is perfectly fine.” The listing agent is adamant, even before having presented the proposal to the sellers. 

The buyers’ broker presses the point about a potential insurance claim. The sellers may avoid most or all of the cost. In any case, they'll have plenty of time to explore a claim before the resolution acceptance deadline.  And they’ll escape responsibility for dozens of other defects.

The listing agent is asked repeatedly if an insurance claim has been filed. It's a yes or no question, but the answers are always ambiguous. “We’re doing what we have to do,” etc. The buyers begin to wonder if the listing agent even understands what an insurance claim is.


Hostility is brewing. The listing agent is angry, and maybe embarrassed over having been exposed as ignorant about insurance claims. She accuses the buyers’ agent of condescension and a bad attitude, and then refuses to communicate further except by text or email.

It's starting to look like the listing agent is motivated simply by resentment of the other agent, and is trying to kill the deal, and the eminently sensible Inspection Resolution that could satisfy both parties and enable the sellers to move out of town in the time frame they’d anticipated. 

The listing agent ignores crucial deadline extension requests and, it appears, does not even present them to her clients. It is an egregious ethical breach.   

But eventually and without a word, the listing agent provides confirmation of a successful claim from the insurer. That roof is not fine. The claim covers a full replacement, not even depreciating for the age of the roof. The sellers’ only cost, if any, will be the modest policy deductible. The roof is replaced and the deal soon closes.


Again, this scenario (or one like it) may or may not have actually occurred. Regardless, these lessons can be drawn from the tale.

-- An agent who argues incessantly and thoughtlessly on their client’s behalf is not necessarily offering good service. When the other side presents a reasonable offer, the right response is to consider it. Understand it, and always present it to the client. A win-win is possible only with mutual participation.

 -- Real estate brokers can easily, secretly act in direct opposition to their client’s best interest. The motivation may be sheer personal animosity or a desire to do business with someone else. The brokering business is occupied mostly by good people, but there are a few who are selfish, unethical, uninformed, and emotionally unstable.

-- When a deal disintegrates, re-listing the property requires disclosing all known defects. Compliance with that may greatly reduce market value, if inspections uncovered a lot of defects. And the listing will be older it may appear stale, and the seller’s plans may be put on hold. The seller may be destined to endure more failed contracts, mismanaged in the hands of an incompetent. Avoid all those hurdles by hiring a good agent at the outset.

Think it over.  This could happen!