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!

[Nathan Gesner]

I believe it's a violation of the law. You can read for yourself here: https://www.clevelandheights.gov/205/Point-of-Sale-Inspectio....

If I understand correctly, they must disclose it before they can accept your offer and they should make the required repairs before they can sell the home so that you have a clean Certificate of Compliance. It sounds as though your REALTOR didn't do their job to protect you and the Seller is trying to scam you.

The first thing I would do is talk to your REALTOR. Let everyone know that you will report them for failing to report. Maybe it will motivate them to make the repairs and give you a Certificate of Compliance so you can move forward.

Even if they comply, I would probably file a complaint against both REALTORS once the transaction is closed. And my complaint would be to the State so that their Broker can't bury it.

[Jonathan Greene]

The violations need to be fixed, that's the whole point of it. It seems like all sides are trying to hoodwink you. You should have known from the beginning. So, your agent did not due diligence or was in on it, but the listing agent should have disclosed these with the listing.

[Colleen Barone]

Just to clarify things. This POS that expired- I was told Monday (June 24) that everything was taken care of and we were good to go. Later that same day, I get a text saying that POS expired and another inspection is being done that Friday (June 28). We received the new POS July 3 around noon. We were set to close July 9 before this happened.

I am just trying to understand what should've taken place when we were told June 24 that the POS was taken care of (everything in compliance) and we were good to go. Isn't some sort of certificate of compliance supposed to be secured by the city inspector saying as much? If so, should my realtor have asked for that before telling us we were good to go?

[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.

[Bob Stevens]

Quote from @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!

 How are you finding out 5 days before, simple answer, your realtor is incompetent. THIS should have been sent to you BEFORE you put in your offer. I have done about 500 props there closing 100s and 100s of POS'S. YES, you need to assume the violations. HOWEVER, whoever walked the property for you, SHOULD have known what violations needed to be repaired. It seems you are doing this on your own. NOT a good idea, 99% of the time it does not end well. Do you have contractors? It appears no. Do you know how much the repairs should REALLY cost vs just being told this is the price? How do you know you got a good deal? Do you know how much rent you should get? Do you know how to close the POS?  Happy to guide you 

BTW which city ?

[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

[Bob Stevens]

Quote from @Colleen Barone:

Just to clarify things. This POS that expired- I was told Monday (June 24) that everything was taken care of and we were good to go. Later that same day, I get a text saying that POS expired and another inspection is being done that Friday (June 28). We received the new POS July 3 around noon. We were set to close July 9 before this happened.

I am just trying to understand what should've taken place when we were told June 24 that the POS was taken care of (everything in compliance) and we were good to go. Isn't some sort of certificate of compliance supposed to be secured by the city inspector saying as much? If so, should my realtor have asked for that before telling us we were good to go?

 BAD realtor, simple answer. YES, the realtor should have told you. ANOTHER reason I never use them 

[Bob Stevens]

Quote from @Jonathan Greene:

The violations need to be fixed, that's the whole point of it. It seems like all sides are trying to hoodwink you. You should have known from the beginning. So, your agent did not due diligence or was in on it, but the listing agent should have disclosed these with the listing.

 The TITL CO , also should have known, they need the " letter" from EACH city indicating the POS was closed, 

[Patrick Drury]

@Colleen Barone
As @Nathan Gesner Mentioned you are supposed to but in reality 9/10 deals that get sold in areas with a POS will not have a POS report provided prior to writing an offer. Usually, agents are lazy and want to get it on the market ASAP or the seller asks them to wait. The issue with the POS is if the seller orders and doesn't sell they have to make the repairs eventually within a specified timeframe since a buyer never assumed the violations and made the repairs. I try and recommend to all my clients if they are looking at investing in an area with a POS to just look elsewhere like on the west side in areas with no POS or make the offer contingent upon a satisfactory review of the POS report prior to closing. 

[David Leggett]

That is definitely problematic!  Was it marketed to you as POS compliant on the listing, or understood that the seller was clearing the POS?  If that's the case, than it's still on the seller to clear the items based on your original agreement. 

It's easy to blame the agent, but if they were told it was POS compliant, I don't see how it's their fault.  Obviously, they could have done more like be in touch with the city and try and foresee any problems that could arise, but I'm seeing this as 100% the fault of the seller, but I don't have all the relevant info.  

[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

[Colleen Barone]

Quote from @Patrick Drury:

@Colleen Barone
As @Nathan Gesner Mentioned you are supposed to but in reality 9/10 deals that get sold in areas with a POS will not have a POS report provided prior to writing an offer. Usually, agents are lazy and want to get it on the market ASAP or the seller asks them to wait. The issue with the POS is if the seller orders and doesn't sell they have to make the repairs eventually within a specified timeframe since a buyer never assumed the violations and made the repairs. I try and recommend to all my clients if they are looking at investing in an area with a POS to just look elsewhere like on the west side in areas with no POS or make the offer contingent upon a satisfactory review of the POS report prior to closing. 

 @Nathan Gesner Thank you!!

[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 appreciate your feedback!

[Colleen Barone]

Quote from @Bob Stevens:

Quote from @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!

 How are you finding out 5 days before, simple answer, your realtor is incompetent. THIS should have been sent to you BEFORE you put in your offer. I have done about 500 props there closing 100s and 100s of POS'S. YES, you need to assume the violations. HOWEVER, whoever walked the property for you, SHOULD have known what violations needed to be repaired. It seems you are doing this on your own. NOT a good idea, 99% of the time it does not end well. Do you have contractors? It appears no. Do you know how much the repairs should REALLY cost vs just being told this is the price? How do you know you got a good deal? Do you know how much rent you should get? Do you know how to close the POS?  Happy to guide you 

BTW which city ?

 @Bob Stevens Hi Bob. The city is Garfield Heights. I of course did not get this sent before I submitted an offer. Most of what was on the POS actually showed up in the sewer scope inspection so we did get a breakdown for those costs. 

The only thing I am responsible for at this point is fixing the upstairs balcony railing. Everything else is taken care of. I would love some contractor recommendations. I sent you a request to connect. Thank you for your time!

[Colleen Barone]

Quote from @David Leggett:

That is definitely problematic!  Was it marketed to you as POS compliant on the listing, or understood that the seller was clearing the POS?  If that's the case, than it's still on the seller to clear the items based on your original agreement. 

It's easy to blame the agent, but if they were told it was POS compliant, I don't see how it's their fault.  Obviously, they could have done more like be in touch with the city and try and foresee any problems that could arise, but I'm seeing this as 100% the fault of the seller, but I don't have all the relevant info.  

 @David Leggett thanks David. It could be that a few dropped the ball:)

[Colleen Barone]

Quote from @Patrick Drury:

@Colleen Barone
As @Nathan Gesner Mentioned you are supposed to but in reality 9/10 deals that get sold in areas with a POS will not have a POS report provided prior to writing an offer. Usually, agents are lazy and want to get it on the market ASAP or the seller asks them to wait. The issue with the POS is if the seller orders and doesn't sell they have to make the repairs eventually within a specified timeframe since a buyer never assumed the violations and made the repairs. I try and recommend to all my clients if they are looking at investing in an area with a POS to just look elsewhere like on the west side in areas with no POS or make the offer contingent upon a satisfactory review of the POS report prior to closing. 

 @Patrick Drury Thank you so much! So, to clarify just make sure there is a contingency in there for review/remedy of the POS?

[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. 

[Colleen Barone]

Quote from @Jonathan Greene:

The violations need to be fixed, that's the whole point of it. It seems like all sides are trying to hoodwink you. You should have known from the beginning. So, your agent did not due diligence or was in on it, but the listing agent should have disclosed these with the listing.

 @jonathan Greene It all worked out. But I will say all of this is such an invaluable learning experience so I am grateful for it. 

[Bob Stevens]

Quote from @Colleen Barone:

Quote from @Bob Stevens:

Quote from @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!

 How are you finding out 5 days before, simple answer, your realtor is incompetent. THIS should have been sent to you BEFORE you put in your offer. I have done about 500 props there closing 100s and 100s of POS'S. YES, you need to assume the violations. HOWEVER, whoever walked the property for you, SHOULD have known what violations needed to be repaired. It seems you are doing this on your own. NOT a good idea, 99% of the time it does not end well. Do you have contractors? It appears no. Do you know how much the repairs should REALLY cost vs just being told this is the price? How do you know you got a good deal? Do you know how much rent you should get? Do you know how to close the POS?  Happy to guide you 

BTW which city ?

 @Bob Stevens Hi Bob. The city is Garfield Heights. I of course did not get this sent before I submitted an offer. Most of what was on the POS actually showed up in the sewer scope inspection so we did get a breakdown for those costs. 

The only thing I am responsible for at this point is fixing the upstairs balcony railing. Everything else is taken care of. I would love some contractor recommendations. I sent you a request to connect. Thank you for your time!

 I have bought and sold about 80 props there and closed about 80 POS I know all the admins and inspectors there. Happy to recommend. BTW, what about all the cosmetic, is it move in ready, we like to call it Sec 8 ready, meaning everthing has to be perfect.  

[Patrick Drury]

@Colleen Barone
I would make sure to have your agent add a contingency in the additional terms of the contract for the POS if you don't get a copy of the report prior to submitting an offer, or just don't invest in those areas. There is no contingency for POS built into the Cleveland contract so you need to add one

[Bob Stevens]

Quote from @Patrick Drury:

@Colleen Barone
I would make sure to have your agent add a contingency in the additional terms of the contract for the POS if you don't get a copy of the report prior to submitting an offer, or just don't invest in those areas. There is no contingency for POS built into the Cleveland contract so you need to add one

The issue is she had a totally incompetent agent. The 1st thing you get is the POS, unless you walk it and know what they will want repaired. Me, I just call them, and they send it to me, but usually know exactly what they want. 

[James Wise]

Quote from @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!

 Sounds like you were working with a Realtor who didn't realize that a POS was required. Not all cities in the area have them, so you'll get a lot of green agents who don't know when one is and is not required.

[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. 

[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. 

[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.