What to do when you get bogus receipts for repairs at a walk through

By
Real Estate Agent with Century 21 Redwood Realty, Arlington Virginia

When buyers make an offer to purchase a home in Arlington, Virginia, they usually make it contingent on a home inspection.  Within that inspection, the inspector will test all major systems, appliances and check for any deficiencies like leaks, cracks and deferred maintenance.  In our standard home inspection removal form in Northern Virginia, it is common practice to ask that all repairs be made by a licensed contractor for the specified trade with a receipt provided prior to closing.

This is very important, because buyers typically do not bring an inspector out again at walk through to verify repairs.   So the buyers and the buyer's agent rely on the receipts to prove the job was done properly, and that is why the proper type of contractor needs to be used and a professional receipt needs to be provided before closing.  

I handled a closing for a buyer this summer in which the receipts were bogus.  Clearly.  They had been created on a Microsoft Word sheet with no dates of work performed, no signature, no license number, no address.  When I requested from the listing agent a license number for the "contractor" it was never provided.

Most legitimate contractor receipts are on a form that has a signature, a date of service and an actual business address and if a license number is not included, it should be able to be provided.  It usually has handwritten notes.  There are clues if they are real or fake.  And if it looks too generic, ask for the license number.  

The seller had made a big deal about replacing the electrical panel, but did not even have a real electrician do the work.  

So what do you do at the final walk through with no or bogus receipts and you are unsure how to check repairs (like an electrical panel being properly installed!).  

You insist the seller put money, and I mean a significant amount, away in escrow so that the repairs can be verified by legitimate, licensed contractors post closing.  That's how I handled my sale this summer, and sure enough, the electrical panel and the plumbing had major issues.  If we had of taken the receipts at face value, the buyer would have been on the hook for the seller's shoddy repairs.

I work with just as many sellers as I do buyers, and as the seller's agent, I make sure they get the work done by the proper professionals with the right kind of documentation.   Contracts are binding, and if the signed agreement says to use a licensed contractor and provide receipts, it needs to be done.    It will save both the buyer and the seller money and trouble in the end.  

If you are looking for a real estate agent to best represent your interests in Arlington, Virginia, contact me to talk about how I can be of service to you.


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Rainmaker
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Marcie Sandalow
Marcie Sandalow Evers & Company Real Estate 301.758.4894 - Bethesda, MD
Bethesda Chevy Chase DC real estate

Did the bank have to approve the escrow, or was this arranged through the settlement attorney?  How lucky your buyers were to have you on their side.  Not everyone would know enough to question the receipts. 

 

Sep 29, 2011 03:49 PM #1
Rainmaker
260,089
Coral Gundlach
Century 21 Redwood Realty, Arlington Virginia - Arlington, VA

Hi Marcie - No bank did not need to approve it.  Settlement attorney handled it.

Sep 29, 2011 04:11 PM #2
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Chris Ann Cleland
Long & Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Northern VA

This is a great solution if you suspect the receipts are bogus.  And it's good to know you do listings and buyers. 

Sep 29, 2011 04:14 PM #3
Rainmaker
260,089
Coral Gundlach
Century 21 Redwood Realty, Arlington Virginia - Arlington, VA

Hi Chris Ann.  When I asked for the license number, the silence was was my first red flag.    And I believe in following the contract.    Thanks for commenting!

Sep 29, 2011 04:23 PM #4
Rainmaker
1,232,341
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

Yikes!  I don't often do re-inspections, as the agents trust the receipts of those "professionals" providing their services.  But it seems to me that every time I do one, there are issues not resolved or still wrong.

Once the HVAC company doing the "repairs" had a license, but it expired four years earlier!

Sep 30, 2011 07:20 AM #5
Rainmaker
727,044
Debbie Walsh
Keller Williams Realty - Middletown, NY
Hudson Valley NY Real Estate 845.928.8000

Good advice Coral!  Too many times people try to get away with not making the proper repairs or using the right people. 

Sep 30, 2011 09:10 AM #6
Rainmaker
260,089
Coral Gundlach
Century 21 Redwood Realty, Arlington Virginia - Arlington, VA

Jay, we should be able to rely on the receipts.  Not one to be paranoid, but there are signs someone is not being honest.  

Debra - It is happening too often these days.

Sep 30, 2011 01:18 PM #7
Rainmaker
526,044
Susan Haughton
Alexandria, VA
Helping You Buy or Sell Alexandria Real Estate

Good for you and your buyers, who are no doubt singing your praises. And what a shame about the bogus receipts...sigh...isn't it challenging enough without the unethical behavior? 

Sep 30, 2011 05:22 PM #8
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Coral Gundlach

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