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

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

Aug 29, 2011 10:04 PM #15
Rainmaker
338,965
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley R since 1976;408-565-8177

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.

Aug 29, 2011 10:32 PM #16
Rainer
40,071
Buki Burke
Ventura, California - Ventura, CA
(805)377-0236, Prudential California Realty

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.

Aug 29, 2011 11:21 PM #17
Rainmaker
16,961
Tim Spargo
Spec Rite Inspections - Lancaster Palmdale CA Inspector - Palmdale, CA
Certified Master Inspector, Inspected Rite

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

 

 

Aug 29, 2011 11:21 PM #18
Rainmaker
16,961
Tim Spargo
Spec Rite Inspections - Lancaster Palmdale CA Inspector - Palmdale, CA
Certified Master Inspector, Inspected Rite

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

Aug 29, 2011 11:23 PM #19
Ambassador
1,294,299
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - San Jose Probate Agent

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.

Aug 29, 2011 11:36 PM #20
Rainmaker
976,671
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

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

Aug 29, 2011 11:52 PM #21
Rainmaker
156,802
George Bennett
Inactive - Port Orford, OR
Inactive Principal Broker, GRI

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

Aug 30, 2011 12:09 AM #22
Rainer
71,550
Pat, Ben and Martin Mullikin
Mullikin Family Realty Group Realty Executives - Integrity - Brookfield, WI

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.

Aug 30, 2011 12:21 AM #23
Rainmaker
313,710
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

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.

Aug 30, 2011 12:50 AM #24
Rainer
177,469
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

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!

Aug 30, 2011 12:55 AM #25
Rainer
190,946
Stephen P. Panczak, Sr.
Keller Williams Realty of Palm Beaches - Palm Beach Gardens, FL
Realtor, Property Mgm't, LCAM

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

Aug 30, 2011 06:41 AM #26
Rainmaker
365,365
Cathy Bureau
www.GreenHomeRealty.com - Alamo Heights, TX
Your Personal Real Estate Concierge

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.

Aug 30, 2011 07:30 AM #27
Rainmaker
1,628,398
Debbie Gartner
Floor Coverings International Westchester NY & Stamford CT - White Plains, NY
The Flooring Girl - Westchester hardwood flooring

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.

Aug 30, 2011 07:39 AM #28
Rainmaker
1,097,277
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

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.

Aug 30, 2011 08:04 AM #29
Rainmaker
827,638
Marc Swartz
Toronto, ON
CPA, CA - Toronto, Durham & York Regions, Ontario

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

Aug 30, 2011 08:13 AM #30
Ambassador
1,741,244
Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Charles Rutenberg Realty - Palm Harbor, FL
Palm Harbor & Dunedin FL Residential Real Estate

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

Aug 30, 2011 08:31 AM #31
Ambassador
1,096,489
Bryan Robertson
Catarra Real Estate, Inc - Los Altos, CA
Broker, Author, Speaker

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.

Aug 30, 2011 09:00 AM #32
Rainmaker
818,634
Paula McDonald
Chevaux Group, PLLC - The Woodlands, TX
CHEVAUX Group ~ The Woodlands, TX 936-203-0279

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.

Aug 30, 2011 09:14 AM #33
Rainmaker
95,077
Jim Bushart
Licensed Public Insurance Adjuster - Springfield, MO
Missouri Licensed Public 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.

Aug 30, 2011 09:55 AM #34
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Rainmaker
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Tim Spargo

Certified Master Inspector, Inspected Rite
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