E&O INSURANCE ALONE IS WORTH HIRING A REALTOR®
Arguably the greatest benefit of having a licensed Realtor® is their Errors & Omissions Insurance. The real estate transaction is fraught with as much liability as any other profession. The medical profession, for example, has a deep set of coverages that protect everyone involved. Real estate is no different. The problem with real estate is that since it’s your house - or it will be - you’re entrenched with risk moreso than anyone else.
Say you put your house on the market. You’re excited. It’s been yours for a decade and you know it’ll sell with multiple offers - and it does. Fast forward two months and the buyers for your house find a leaky roof, mold, and structural issues. Who gets sued?
WHAT IS E&O INSURANCE?
Any licensed Realtor® worth their career has Errors & Omissions Insurance (E&O Insurance). They pay thousands of dollars a year so that in the event of a lawsuit, they’re ready to protect you.
Unlike other sectors, residential real estate is heavily dependent on the word of normal consumers. Although you hire an agent and their team, you are ultimately leading a ring of professionals into a sale. Your word, your intent, your disclosures - these are all the laws of the transaction. So when something goes wrong, you know it’ll be coming back to you. Your Realtor® should be able to see several steps ahead, but ultimately, a large part of what they know is based on what you do.
Real estate lawsuits usually are formed from the following. Keep in mind, that this is only the beginning. In something as complicated as a real estate transaction, much, much more can go wrong.
Lead paint
Septic tank issues
Mold
Roof leaks
Asbestos
Radon
Insects and rodents
Caused them to suffer a financial loss
Breached a contract
Failed to meet standard of care guidelines
Posted inaccurate information in a listing
Misrepresented the condition of a property
WHAT IT SAYS ABOUT A REALTOR®
This alone should be reason enough to hire a Realtor®. I often hear folks who try to sell a house by themselves or want a discounted service. Either that, or they hire a Realtor® who is a part-time family-friend. A full-time agent has, along with the necessary skillset, the proper insurance. Lawsuits can be something as frivolous as you spelling your name differently on different forms. Legal fees are expensive, so even that costs up to $5,000.
You can assume that a Realtor® who is budgeting for E&O Insurance takes their business seriously. They understand that real estate is an imperfect industry. It relies on every’s best efforts, but often falls short of mutual satisfaction. They understand for their peace of mind - and yours - an annual investment of a few thousand dollars will guarantee that after you move into your new house, the only thing you’ll have to worry about is what furniture to select.
WHY IT MATTERS IN THE SAN FERNANDO VALLEY
At GRV, we’re always trying to relate our information back to our clients. Because this city was mostly built in the 1960’s and 1970’s, we often find the same set of problems.
Subterranean termites are very, very common in this city.
Earthquake damage to the foundation
Lead-paint in walls
Damages during an open house
Seller’s Market Aggressive Advertising
WHAT IT DOESN'T COVER
Like the name suggests, it covers innocent mistakes. It does not cover intentional fraud or any of the like.
