First time purchase- POS question

[Colleen Barone]

Hi,

I am in the process of buying my first investment property and am using a realtor. About 5 days before closing, I found out there are POS violations; I was told by my realtor the old report expired and the inspector went out on 7/1. A new POS report was sent to me. 

My question is the old POS report that expired was valid for one year. So, the sellers were informed as to what needed to be taken care of. I know I can assume everything on the report. I guess I am trying to understand how I am just finding out about this right before close. Is this something my realtor should have looked into; asked about the POS report and either found out the sellers weren't going to fix things or ask for proof they were compliant? 

I am trying to educate myself so I just keep getting better at this process. Any insight would be appreciated!

[Bud Gaffney]

What issues were on the POS? Are they big issues?

[James Wise]

Quote from @Logan Winn:

Understanding Point-of-Sale (POS) Violations

Point-of-Sale (POS) violations are issues identified during a mandatory inspection that must be addressed before a property can be sold. These inspections are often required by local municipalities to ensure that properties meet certain safety and habitability standards. The POS report lists any violations that need to be corrected, either by the seller before the sale or by the buyer after assuming responsibility for the repairs.

Seller's Disclosure Obligations

Sellers are typically required by law to disclose any known issues with the property, including POS violations. This requirement can vary by state and locality, but failure to disclose can lead to legal consequences, including potential lawsuits for misrepresentation or concealment of pertinent facts. The seller should have informed you about the POS violations as soon as they were aware of them.

Realtor's Responsibilities

Your realtor has a fiduciary duty to act in your best interest, which includes conducting due diligence to uncover any issues that could affect the transaction. According to the National Association of Realtors' Code of Ethics, realtors must avoid concealment of pertinent facts and should not misrepresent the condition of the property. In your case, your realtor should have:

- Inquired about the POS Report: Ensured that the POS report was up-to-date and reviewed it for any violations.

- Communicated Findings: Informed you promptly about any POS violations and discussed the implications.

- Negotiated Solutions: Worked with the seller's agent to determine whether the seller would address the violations or if you would need to assume responsibility, potentially negotiating a price reduction or credit at closing to cover repair costs

Why You Found Out Late

The fact that you discovered the POS violations only five days before closing suggests a lapse in communication or oversight. This could be due to several reasons:

- Expired Report: The old POS report expired, and the seller may not have obtained a new one until recently. This delay could have been avoided with proactive follow-up from your realtor.

- Seller's Responsibility: The seller might have delayed addressing the violations or obtaining a new report, hoping to pass the responsibility to you.

- Realtor's Oversight: Your realtor may have failed to verify the status of the POS report early in the process, leading to last-minute revelations.

Steps to Take

To address the current situation and prevent similar issues in the future, consider the following steps:

1. Review the New POS Report: Examine the new POS report thoroughly to understand the scope of the violations and the estimated cost of repairs.

2. Negotiate with the Seller: Discuss with your realtor the possibility of negotiating with the seller to either fix the violations before closing or provide a credit at closing to cover the repair costs

3. Consult a Real Estate Attorney: Given the proximity to the closing date, consulting a real estate attorney may help you navigate any legal implications and ensure your interests are protected.

4. Evaluate Realtor Performance: Reflect on your realtor's performance and consider providing feedback or seeking a different realtor for future transactions if you feel your current realtor did not adequately represent your interests.

In summary, your realtor should have proactively checked the status of the POS report and communicated any issues to you well before the closing date. The late discovery of POS violations indicates a lapse in due diligence. Moving forward, ensure that all necessary inspections and reports are obtained and reviewed early to avoid last-minute surprises. Additionally, consider negotiating with the seller to address the violations or provide compensation for the required repairs.

By taking these steps, you can better protect your investment and ensure a smoother transaction process in the future.

 Holy Chat GPT

[Andrew Syrios]

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Bob Stevens:

Quote from @Andrew Syrios:

I'm not attorney but I'm quite confident they are duty bound to at a minimum disclose that to you beforehand. I would think they are either mandated to fix those items or you can back out of the sale and get your EMD back.

YES 100% it should have been shown.  , the realtor is incompetent, Thats the 1st thing they should give you. This is just another reason I never use realtors

 There are definitely many awful agents out there, but there are still some good ones. Indeed, the good ones I've used tend not to have a particularly high view of their colleagues in the industry

 @Andrew Syrios I guess I just need to spend more time searching for a realtor that is a better fit. I had asked this current one about submitting multiple offers. He said that is frowned upon and not to do it. Yet I listened to an interview yesterday with Henry Washington and he said that you can at times, make up to 10 offers in a week just to find the best deals. 

It sounds like you have a very "homeowner" minded agent. Investment-minded agents are relatively rare but if you're going to be working with an agent, you definitely need to work with someone who understands what's important to investors and if willing to make both low and multiple offers. 

 Yes. I guess I need to speak with multiple agents to find one that is ok with this. 

I would also ask around in the local forum here on BP, find some investor and agent groups on Facebook for your area and ask there for investment-minded agents and go to your local REIA group and do the same. Then you can talk to the ones that seem the best and try to vet them a bit. Good luck!

[Colleen Barone]

Quote from @Logan Winn:

Understanding Point-of-Sale (POS) Violations

Point-of-Sale (POS) violations are issues identified during a mandatory inspection that must be addressed before a property can be sold. These inspections are often required by local municipalities to ensure that properties meet certain safety and habitability standards. The POS report lists any violations that need to be corrected, either by the seller before the sale or by the buyer after assuming responsibility for the repairs.

Seller's Disclosure Obligations

Sellers are typically required by law to disclose any known issues with the property, including POS violations. This requirement can vary by state and locality, but failure to disclose can lead to legal consequences, including potential lawsuits for misrepresentation or concealment of pertinent facts. The seller should have informed you about the POS violations as soon as they were aware of them.

Realtor's Responsibilities

Your realtor has a fiduciary duty to act in your best interest, which includes conducting due diligence to uncover any issues that could affect the transaction. According to the National Association of Realtors' Code of Ethics, realtors must avoid concealment of pertinent facts and should not misrepresent the condition of the property. In your case, your realtor should have:

- Inquired about the POS Report: Ensured that the POS report was up-to-date and reviewed it for any violations.

- Communicated Findings: Informed you promptly about any POS violations and discussed the implications.

- Negotiated Solutions: Worked with the seller's agent to determine whether the seller would address the violations or if you would need to assume responsibility, potentially negotiating a price reduction or credit at closing to cover repair costs

Why You Found Out Late

The fact that you discovered the POS violations only five days before closing suggests a lapse in communication or oversight. This could be due to several reasons:

- Expired Report: The old POS report expired, and the seller may not have obtained a new one until recently. This delay could have been avoided with proactive follow-up from your realtor.

- Seller's Responsibility: The seller might have delayed addressing the violations or obtaining a new report, hoping to pass the responsibility to you.

- Realtor's Oversight: Your realtor may have failed to verify the status of the POS report early in the process, leading to last-minute revelations.

Steps to Take

To address the current situation and prevent similar issues in the future, consider the following steps:

1. Review the New POS Report: Examine the new POS report thoroughly to understand the scope of the violations and the estimated cost of repairs.

2. Negotiate with the Seller: Discuss with your realtor the possibility of negotiating with the seller to either fix the violations before closing or provide a credit at closing to cover the repair costs

3. Consult a Real Estate Attorney: Given the proximity to the closing date, consulting a real estate attorney may help you navigate any legal implications and ensure your interests are protected.

4. Evaluate Realtor Performance: Reflect on your realtor's performance and consider providing feedback or seeking a different realtor for future transactions if you feel your current realtor did not adequately represent your interests.

In summary, your realtor should have proactively checked the status of the POS report and communicated any issues to you well before the closing date. The late discovery of POS violations indicates a lapse in due diligence. Moving forward, ensure that all necessary inspections and reports are obtained and reviewed early to avoid last-minute surprises. Additionally, consider negotiating with the seller to address the violations or provide compensation for the required repairs.

By taking these steps, you can better protect your investment and ensure a smoother transaction process in the future.

 @loganwinn Thank you so very much for taking the time to respond to my post in such detail. It was extremely helpful!!

[Colleen Barone]

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Bob Stevens:

Quote from @Andrew Syrios:

I'm not attorney but I'm quite confident they are duty bound to at a minimum disclose that to you beforehand. I would think they are either mandated to fix those items or you can back out of the sale and get your EMD back.

YES 100% it should have been shown.  , the realtor is incompetent, Thats the 1st thing they should give you. This is just another reason I never use realtors

 There are definitely many awful agents out there, but there are still some good ones. Indeed, the good ones I've used tend not to have a particularly high view of their colleagues in the industry

 @Andrew Syrios I guess I just need to spend more time searching for a realtor that is a better fit. I had asked this current one about submitting multiple offers. He said that is frowned upon and not to do it. Yet I listened to an interview yesterday with Henry Washington and he said that you can at times, make up to 10 offers in a week just to find the best deals. 

It sounds like you have a very "homeowner" minded agent. Investment-minded agents are relatively rare but if you're going to be working with an agent, you definitely need to work with someone who understands what's important to investors and if willing to make both low and multiple offers. 

 Yes. I guess I need to speak with multiple agents to find one that is ok with this. 

I would also ask around in the local forum here on BP, find some investor and agent groups on Facebook for your area and ask there for investment-minded agents and go to your local REIA group and do the same. Then you can talk to the ones that seem the best and try to vet them a bit. Good luck!

 @Andrew Syrios So, I live in Los Angeles (a place where I cannot afford to buy anything-shocker:)) And I bought my this property in Cleveland. I will look on here for people in the Cleveland area to get some suggestions. 

I wish I could attend 'local' REIA groups for that area. I plan on starting to attend some here as I am sure many local SoCal people invest out of state. Thank you Andrew!!!!

[Andrew Weiner]

An agent that works in the Greater Cleveland suburbs regularly should have been asking about it.  I would normally ask for that before I put in an offer or the offer.  Some sellers only pull the POS after getting an offer so they don't get stuck with the repairs by the city if they don't end up selling, I'm not a huge fan of this but it does happen.  Even in this case I would still know that prior to putting in an offer.  

[Bob Stevens]

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Bob Stevens:

Quote from @Andrew Syrios:

I'm not attorney but I'm quite confident they are duty bound to at a minimum disclose that to you beforehand. I would think they are either mandated to fix those items or you can back out of the sale and get your EMD back.

YES 100% it should have been shown.  , the realtor is incompetent, Thats the 1st thing they should give you. This is just another reason I never use realtors

 There are definitely many awful agents out there, but there are still some good ones. Indeed, the good ones I've used tend not to have a particularly high view of their colleagues in the industry

 @Andrew Syrios I guess I just need to spend more time searching for a realtor that is a better fit. I had asked this current one about submitting multiple offers. He said that is frowned upon and not to do it. Yet I listened to an interview yesterday with Henry Washington and he said that you can at times, make up to 10 offers in a week just to find the best deals. 

It sounds like you have a very "homeowner" minded agent. Investment-minded agents are relatively rare but if you're going to be working with an agent, you definitely need to work with someone who understands what's important to investors and if willing to make both low and multiple offers. 

 Yes. I guess I need to speak with multiple agents to find one that is ok with this. 

I would also ask around in the local forum here on BP, find some investor and agent groups on Facebook for your area and ask there for investment-minded agents and go to your local REIA group and do the same. Then you can talk to the ones that seem the best and try to vet them a bit. Good luck!

 @Andrew Syrios So, I live in Los Angeles (a place where I cannot afford to buy anything-shocker:)) And I bought my this property in Cleveland. I will look on here for people in the Cleveland area to get some suggestions. 

I wish I could attend 'local' REIA groups for that area. I plan on starting to attend some here as I am sure many local SoCal people invest out of state. Thank you Andrew!!!!

 There is no reason to spend thousands to fly there and sit in on a RE meeting. Yes, I know dozens of investors from CA that have purchased about 200 props in Cleveland, :) . Heck I live in FL and do all my biz there. Closing today on two more duplex's , 

Good luck 

[Andrew Syrios]

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Colleen Barone:

Quote from @Andrew Syrios:

Quote from @Bob Stevens:

Quote from @Andrew Syrios:

I'm not attorney but I'm quite confident they are duty bound to at a minimum disclose that to you beforehand. I would think they are either mandated to fix those items or you can back out of the sale and get your EMD back.

YES 100% it should have been shown.  , the realtor is incompetent, Thats the 1st thing they should give you. This is just another reason I never use realtors

 There are definitely many awful agents out there, but there are still some good ones. Indeed, the good ones I've used tend not to have a particularly high view of their colleagues in the industry

 @Andrew Syrios I guess I just need to spend more time searching for a realtor that is a better fit. I had asked this current one about submitting multiple offers. He said that is frowned upon and not to do it. Yet I listened to an interview yesterday with Henry Washington and he said that you can at times, make up to 10 offers in a week just to find the best deals. 

It sounds like you have a very "homeowner" minded agent. Investment-minded agents are relatively rare but if you're going to be working with an agent, you definitely need to work with someone who understands what's important to investors and if willing to make both low and multiple offers. 

 Yes. I guess I need to speak with multiple agents to find one that is ok with this. 

I would also ask around in the local forum here on BP, find some investor and agent groups on Facebook for your area and ask there for investment-minded agents and go to your local REIA group and do the same. Then you can talk to the ones that seem the best and try to vet them a bit. Good luck!

 @Andrew Syrios So, I live in Los Angeles (a place where I cannot afford to buy anything-shocker:)) And I bought my this property in Cleveland. I will look on here for people in the Cleveland area to get some suggestions. 

I wish I could attend 'local' REIA groups for that area. I plan on starting to attend some here as I am sure many local SoCal people invest out of state. Thank you Andrew!!!!

Yeah, LA is real, real tough to invest in for lots of reasons. But I still recommend taking regular trips to anywhere you invest in out-of-state and it would be a good idea to time the next trip with when the local REIA group is meeting. Good luck