Your buyers have questions. You want to be helpful and answer them, but should you? 

Surprisingly, answering many seemingly innocuous real estate questions — Is this a safe neighborhood? How are the schools? Why are they selling? — can get you into legal trouble. 

How do you do right by your clients without landing yourself in hot water? 

You can’t just say, “I’m not allowed to answer that,” so how do you answer these questions? Whether it’s a fair housing violation, a breach in fiduciary duty, or potentially misleading information, you need to think before you respond. Because some questions come up a lot, you’ll want to understand the risks and know how to answer. 

Real Estate Questions to Answer Carefully

Let’s take a look at some of the questions you want to be careful when answering and how to steer clear of trouble. 

Is it a good neighborhood?

It makes sense that buyers want to know about the neighborhood they are considering living in, but this question has a number of issues. 

First, good is subjective. Do they mean safe or low crime? Do they mean family friendly? Do they mean, “Will I fit in here?” 

• Safety — Sometimes crime rates are conflated with race or class, which can get you into trouble. Another concern is that if you say it’s safe and they experience crime, they may sue you for misrepresentation. To answer this question, refer them to the local police department or police reports. 
• Family friendly — Families are protected from discrimination in housing. Saying it’s not a great place for families might steer people away. You can encourage them to visit and observe the neighborhood at different times of day. People looking for family friendly neighbors also often ask, “Are the schools good?” encourage them to explore the school through a site like https://www.greatschools.org/. 
• Neighborhood fit — This question may get at demographics. Some clients may be looking for a diverse neighborhood. Some may be looking for a place where they will fit in based on any number of criteria — race, age, ethnicity, religion. Answering this question can run contrary to Fair Housing laws. You can direct clients to demographic information through the U.S. Census website or other demographic sites. They can also get a sense through observation of the neighborhood itself. 

In some places, sellers are required to disclose specific “nuisances.” Make sure sellers are aware and disclose. If you are aware of such neighborhood nuisances, disclose them. 

Why are they selling?

By answering this one, you could be breaching fiduciary duty. Any reason for selling that makes the seller’s need seem higher could reduce offers. For example, relocating for a job, moving closer to help family, loss of a job, or divorce could suggest that the seller needs to sell fast. See Should a Real Estate Agent Disclose Divorce in a Home Sale? Other answers, such as wanting a lower mortgage, the upkeep is too much, or needing more room can make potential buyers reconsider if the house is right for them. A general answer like, “They are ready for a change,” avoids revealing personal information. 

Who owns the property?

Don’t speculate on the ownership of the property. Information that is not public may influence buyer’s offers. Some situations are complicated, and you could unwittingly give incorrect information. Sometimes issues come up with the title, and you don’t want to have falsely assured buyers that it’s “fine.” If you are selling property you own, do disclose that. 

Has anyone died in the house?

Make sure you understand local requirements before answering this question. In some states, you need to disclose death by murder or suicide. In other states, you don’t have to disclose death, natural or otherwise, at all. Still other states require disclosing all deaths within a certain timeframe. Understand the laws where you are practicing and make sure to disclose correctly. See Selling a Stigmatized Property for more information. 

Have there been any major renovations or updates?

Of course a buyer wants to know what’s been done to the property and when, but the answer can be tricky. If you cite “recent renovations,” people might assume work was done more recently than you mean. If you pull a permit file, you might send the message that the file is complete and accurate, though it might not be. One in five real estate lawsuits can be connected to permitting issues. Permit History Reports can give information that is useful, and buyers should do due diligence from there. 

What is the lowest price the seller will accept?

Don’t answer that question. As the seller’s agent, you could be causing them to miss out on higher offers. If you represent the buyer, you don’t know what the seller will accept and could steer your client to pass on a property they think they can’t afford or to lowball and miss out on a property. Instead encourage the potential buyer to make a formal offer. The seller will decide to accept, reject, or counter the offer. 

Make Sure You’re Covered

What happens if you face legal action because of how you answered a question? 

Make sure you have the right real estate errors and omissions insurance. CRES offers customized E&O Insurance for real estate professionals, and with E&O + ClaimPrevent®, you’ll have access to qualified attorneys who can give you expert legal advice. That means if you say something and worry about the implications or you wonder if you should answer a question, you can get an expert response and some peace of mind. 

Contact CRES today at 800-880-2747 to learn more about our ClaimPrevent® legal services and the coverage to best fit your situation. 

As part of one of the largest insurance brokers in the world, we have access to more real estate E&O options than just about anyone. Let us find you the best coverage for the best price.