Is an agent who coordinates repairs acting as a Contractor?

By
Home Inspector with Spec Rite Inspections - Lancaster Palmdale CA Inspector

Are Agents acting as a General Contractor when repairs are made?

As I'm around and about quite a bit.. I have seen a pattern of the agents "coordinating" repairs.. to the extent that I wonder if they are acting as a General Contractor.

The state that I'm in.. California, I'm nearly certain that they are. 

We have * a lot * of REO's that are being "fixed up"... Is the risk worth the reward?

Well then, what is the concern?

Well, quite frankly, depending on the area you live in... you could be violating the law or *even committing a crime*. Is is worth risking what you have worked for to gain the "approval" of the banks? Do agents really think that the banks will stand by you if you are stung? 

  • Does the person in charge know if the folks helping are licensed? What are the implications if they are not?
  • Do you know exactly what improvement require permits? What are the reprocussions if you don't obtain proper permits?
  • And worse yet... what if someone gets hurt? Are *you* responsible? If the "helper/trade/sub contractor isn't licensed and the money is passing thru YOUR HANDS.. YOU MAY BE RESPONSIBLE 

 

I have asked a couple of agents that I know.. simply because I was concerned that they may not know what they are doing if they realized that they are throwing themselves under the bus... the responses have been (and incorrectly so)

  • "I'm only the person paying them.. I have nothing else to do with it." <-- Wrong, if you are writing the checks... you're the BOSS!
  • "It's the only way I can get the listings from the Asset Managers, if I don't get *everything* done, I'm less likely to keep getting listings" I'd have to ask... "Is it worth it?"
Anyway, IMO, it's important to understand the risks and implications of our everyday undertakings.. I hope I shed some light on this. Along with being a Real Estate Inspector.. I have also been a licensed building contractor for over a decade, so I have a *bit* of insight to some of this.
 
Be well! 
Posted by

__________________________________________________________________________________

Tim Spargo, CMI

Certified Residential and Commercial Inspector

Spec Rite Inspections | Lancaster and Palmdale CA Home Inspections

 

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Topic:
ActiveRain Community
Groups:
Cash In On Foreclosures Investment Group
Los Angeles California Real Estate
REO REALTORS
Tags:
reo
renovations
asset manager
who is responsible for repairs

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Show All Comments
Rainer
48,637
Chris Lefebvre
Methuen MA Real Estate Pro
eXp Realty

I sometimes help to coordinate repairs, but I don't do the actual work. I'm too busy for that anyway!

August 29, 2011 10:04 PM
Rainmaker
338,151
Lloyd Binen
Silicon Valley R since 1976;408-565-8177
Certified Realty Services

Well deserved Feature post, sir.

Your agent friends are not paying attention to e-mail and magazine communication from the California Association of Realtors (CAR).  CAR has on numerous occasions warned us not to hire unlicensed trades people.

But it's interesting that you raise the issue.  There are no licensing requirements in CA to call yourself a "Property Inspector."  So those unlicensed guys doing REO repair work illegally, could be legally doing Property Inspections.  Kinda weird.

August 29, 2011 10:32 PM
Rainer
40,071
Buki Burke
(805)377-0236, Prudential California Realty
Ventura, California

A timely post for me. I am currently helping coordinate workers--painter, handyman, flooring, countertops--basically to save money for the client. I am very careful that those lined up are licensed and bonded. Thanks for the post.

August 29, 2011 11:21 PM
Rainmaker
16,861
Tim Spargo
Certified Master Inspector, Inspected Rite
Spec Rite Inspections - Lancaster Palmdale CA Inspector

Lloyd.. good point! And they probably do... right after work, for some "extra money" :)

 

 

August 29, 2011 11:21 PM
Rainmaker
16,861
Tim Spargo
Certified Master Inspector, Inspected Rite
Spec Rite Inspections - Lancaster Palmdale CA Inspector

Buki - good decision. A sub can still be a "prime" for their trade.

August 29, 2011 11:23 PM
Ambassador
1,232,992
Kathleen Daniels
San Jose Homes for Sale - Probate Specialist
KD Realty - 408.972.1822

It depends ... other than inspections ... I have my clients coordinate repairs.  I will provide access to the property ... there is too much liability taking on too many roles in this business.  I will go to the ends of the earth for my clients ... I do so making sure all parties are covered and protected.

August 29, 2011 11:36 PM
Rainmaker
973,576
Sharon Alters
Your Fleming Island Relocation Agents.
Coldwell Banker Vanguard Realty

I think I'm glad I don't live in California. The repairs come from a list from a building inspector and we are sometimes asked to secure a person to do them. Of course they are licensed and bonded, but just making a phone call doesn't make me a contractor. Sellers don't have access to the best vendors as we do. It is just part of the service we give.

Sharon

August 29, 2011 11:52 PM
Rainmaker
156,802
George Bennett
Inactive Principal Broker, GRI
Inactive

Excellent points. I'll consider it a word to the wise. Thanks.

August 30, 2011 12:09 AM
Rainmaker
71,450
Pat, Ben and Martin Mullikin
Mullikin Family Realty Group Realty Executives - Integrity

Ironic. Just the other day I read a blog about an agent who jumped in and took care of some painting that needed to be done to get the deal closed. I even think she had her husband helping. Praise and accolades were heaped upon them. Turn the page, read this blog, and go running scared for doing something extra to help the client or the deal. Ya just can't win.

August 30, 2011 12:21 AM
Rainmaker
313,510
Sandy Acevedo
RE/MAX Masters, Inland Empire Homes for Sale
951-290-8588

Hi Tim, I have never thought of it in this way. But you are absolutely correct. If it walks and talks and pays like a general contractor, then it is a general contractor. Good advice.

August 30, 2011 12:50 AM
Rainer
177,469
Rosalie Evans
The Evans Group, Sioux Falls, SD Homes For Sale
Meritus Group Real Estate

I can see fixing up cosmetic things like landscaping and painting but I sure wouldn't do much other then that! Its just not worth the risk!

August 30, 2011 12:55 AM
Rainer
185,646
Stephen P. Panczak, Sr.
Realtor, Property Mgm't, LCAM
Keller Williams Realty of Palm Beaches

Great post...but it would be best to give client a list and let them go for it.

August 30, 2011 06:41 AM
Rainmaker
360,327
Cathy Bureau
Your Personal Real Estate Concierge
www.GreenHomeRealty.com

Great topic! I am a licensec contractor with the city of San Antonio, too.  If you give advice, other than real estate, you are acting as a general contractor. Most cities and states don't regulate who can GC a job, but you can be sued. Your E&O only covers "real estate" advice.  You also fall into "referral liability" when you give out names and such.  My recommendation is to partner with a general contractor, 3 at least.  Then that way your client can't say you gave out bad advice, you put some responsibity on them. I carry business insurance on my GC jobs, it supplements that which E&O doesn't.

August 30, 2011 07:30 AM
Rainmaker
1,563,500
Debbie Gartner
The Flooring Girl - Westchester hardwood flooring
Floor Coverings International Westchester NY & Stamford CT

Oh wow, I can definitely see this being an issue.  And, regardless of whether it's the real estate agent or homeowner or bank "GCing" the job, always make sure you are working w/ licensed contractors.  If not, and something goes wrong/someone gets hurt, it is their responsibility.  It's sad right now how many contractors/people are doing work out there wo/ insurance.

August 30, 2011 07:39 AM
Rainmaker
1,046,450
Scott Godzyk
One of Manchester NH's Leading Agents
Godzyk Real Estate Services

If you list REO homes you almost have to be a general contractor, a conductor, a peace maker, a listener, a go getter, a locksmith, a repairman and have a big roledex with alot of other contractors to get the house in ready condition, fix teh emergencies and get the deal done.

August 30, 2011 08:04 AM
Rainmaker
824,084
Marc Swartz
CPA, CA - Toronto, Durham & York Regions, Ontario

Tim - There are so many potential implications and pitfalls.  One needs to be very careful.

August 30, 2011 08:13 AM
Ambassador
1,722,092
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Palm Harbor & Dunedin FL Residential Real Estate
Charles Rutenberg Realty

Often the client is out of state and many times out of country and they depend on our assistance.

August 30, 2011 08:31 AM
Ambassador
1,082,217
Bryan Robertson
Broker, Author, Speaker
Catarra Real Estate, Inc

If you've been authorized to coordinate repairs and hire licensed professionals, then you're not acting as a general contractor.  That requires soliciting business or actually performing the work.  Could there be liability in coordinating?  Sure, but then there's so much liability in our business as it is.

August 30, 2011 09:00 AM
Rainmaker
778,598
Paula McDonald
CHEVAUX Group ~ The Woodlands, TX 936-203-0279
Chevaux Group, PLLC

So many things to consider these days.  We all do need to be very careful too in offering opinions on those things that one thinks needs repairing.  I had an agent once who walked around with the contractors "telling" them what they should be doing.  I believe she was really crossing the line big-time.

August 30, 2011 09:14 AM
Rainmaker
95,077
Jim Bushart
Missouri Licensed Public Adjuster
Licensed Public Insurance Adjuster

As an energy auditor, I can assure you that an uncoordinated effort in the implementation of improvements can destroy a home ... no matter how good the contractors are.

Each individual contractor is focused on his specific task.  The house, however, operates as one system with each part working together (or not) with the rest. 

Plumbers will destroy a floor joist to put the toilet in the exact spot you tell them to.  HVAC contractors have done considerable damage to roofing/attic supports as well as other important parts of the building to simply install and leave. 

The end result must rest with the person who coordinated ... properly or not ... the effort.  It should be left to the pros.

August 30, 2011 09:55 AM
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Rainmaker
16,861

Tim Spargo

Certified Master Inspector, Inspected Rite
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