Problems can arise if a home doesn\u2019t meet a buyer’s expectations in real life.<\/p>\n\n\n\n
Key Takeaways: <\/strong><\/p>\n\n\n\n Buying a home \u201csight unseen\u201d was not a phenomenon invented during the COVID-19 pandemic. It\u2019s long been common for investors and military buyers who are relocating, among others, who sometimes must make purchases without visiting a property. With the shift to virtual tours and showings in the past year, however, more buyers are making offers without setting foot inside a home. It\u2019s important for real estate pros to know the risks in \u201csight unseen\u201d sales that can lead to liability\u2014and take steps to mitigate those risks.<\/p>\n\n\n\n When buyers purchase a property relying only on photos and online tours, problems can arise if the home doesn\u2019t meet their expectations in real life. Disappointed purchasers may bring claims against the listing broker, the buyer\u2019s broker, or both when they discover a previously unidentified defect or other undesirable feature. Such claims typically involve a failure to disclose a material fact or a misrepresentation of the property\u2019s condition or characteristics.<\/p>\n\n\n\n Use these best practices to limit surprises\u2014and potential liability\u2014in a \u201csight unseen\u201d transaction.<\/p>\n\n\n\n Advise the purchaser of all known material defects.<\/strong> Disclosure laws and the REALTOR\u00ae Code of Ethics still apply in virtual transactions. Seller disclosures must be accurately and fully completed and provided as required by state law. A buyer\u2019s broker should follow up with the listing broker for any missing responses and ask the buyers what additional information they need related to any disclosed defect. For example, if a seller discloses prior water damage, the buyers may want to ask for proof of remediation and request additional inspections.<\/p>\n\n\n\n Avoid misrepresentation or exaggeration in listing photos and virtual tours.<\/strong> Resist adding or removing anything of material substance\u2014Standard of Practice 12-10 requires REALTORS\u00ae to present a true picture to the public. Enhancing the lawn color during the dull winter months might be okay, but airbrushing out the power lines across the backyard is not.<\/p>\n\n\n\n Watch out for red flags.<\/strong> REALTORS\u00ae have a duty under Article 2 of the Code of Ethics to avoid exaggeration, misrepresentation, or concealment of pertinent facts, but do not have a duty to discover hidden defects. Carefully view the property during a virtual showing to identify any observable defects. Point these out to the buyers on camera and put them in writing after the show- ing. Follow up with the listing broker on any issues where the buyers want more information.<\/p>\n\n\n\n Avoid assuming buyers\u2019 duties.<\/strong> Ask buyers to write down issues they\u2019re concerned about (such as noises, smells, or proximity to neighbors). Observe and report objectively, but don\u2019t make the decisions or assume something \u201cisn\u2019t a big deal.\u201d<\/p>\n\n\n\n Protect yourself, and your clients, in writing.<\/strong> Ensure that the purchase agreement includes an appropriate due diligence period and contingencies like inspections and a final walkthrough. Work with an attorney to draft an addendum to clarify your role and emphasize the buyer\u2019s responsibilities. The addendum should specify that the buyers\u2014not the brokers, agents, or seller\u2014are responsible for verification, walkthroughs, and professional inspections to confirm that the property is satisfactory. Many state or local REALTOR\u00ae associations have \u201csight unseen\u201d addendums available to members.<\/p>\n\n\n\n\n
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