As the 13-year-old told his mother when asked about the progress he was making on his school biology paper: "Fine . . . but I think I've learned more about penguins than I ever wanted to know."
Today's home shopper can sympathize with him. Once the potential buyer gets really serious about making an offer on a house, what happens?
Like a dam bursting, the realtor is suddenly pointing out hairline cracks in the patio, how serious plumbing problems developed two years before and that it may, or may not, be resolved, and that five years before, two members of the family then occupying the house had been murdered in their beds. A full-fledged confessional.
Is all of this gushing-forth of information--ranging from pertinent to frivolous, to interesting-but-so-what--really necessary?
"You'd better believe it," according to Frederick J. Fisher, president of Torrance-based Fisher Associates.
"It's not enough any more to fully disclose everything about a property--to document it and spell out what may or may not be wrong with it, and what may or may not have to be repaired. It's one thing for a realtor to say that he's discharged his duties in this respect. It's quite another to prove that he has, from an evidentiary point of view."
The "why" of it, of course, is the much-reported, much-lamented explosion of litigation aimed at the industry--so-called "errors and omissions" liability suits. Litigation that, to the real estate industry, is what malpractice is to the health field.
"Like practically everyone else writing professional liability coverage," said Adrian Chapman, senior claims analyst for Fremont Indemnity, a branch of Fremont Insurance Co., "we've simply stopped writing errors and omission insurance and are sitting back and reviewing it. The claims are ridiculous and the settlements have been ridiculous."
To the point where the number of insurers in the state writing such coverage has dropped from about a half dozen a year ago to--at last count--no more than two today, and where both premiums and deductibles have skyrocketed.
"The standard deductible on an E & O policy," Fisher adds, "used to be $1,000 to $2,500. Now, commonly, it's $25,000 and, for a large company, the premium can run easily into six figures a year." The alternative for many realtors? To operate "naked"--the uninsured, crossed-fingers approach to the problem.
It is largely at this target that lawyer-turned-claims-investigator Fisher has zeroed in on in putting together his newly created Claim Prevention Support Program.
Training Program Offered
"All of this has grown out of my 11 years of experience in handling claims investigations for insurance companies," he said. "I know what categories the claims are going to fall into and where the principal mistakes are being made."
And much of this came out of work done by Fisher in conjunction with the Barr-Leden insurance brokerage in Van Nuys two years ago, when a model errors and omissions program was put together for local realty boards and in the course of which more than 1,600 E & O claims were researched.
Fisher Associates' approach: "We come into a realtor's office and provide in-house training and supervision--not just training the people, but reviewing the office's entire administrative procedure," Fisher added.
"For instance, the only other group that keeps files as badly as real estate people are insurance agents. Most of them simply use an 8 1/2x11-inch envelope--slit horizontally at the top and with pertinent data printed on the side--nothing but a transaction file. At the very least, they need two such files, one for the property itself, where it can be noted every time the property is shown to someone, and another one for the transaction itself."
While the E & O course can be a one-shot, three-hour training session (at $75 an hour), "It's really more effective," Fisher says, "if there are at least two or three follow-up visits."
But when claims are filed, Fisher Associates moves in, investigates them objectively, lets the realtor know where he stands, legally, and how the litigation can be best resolved.
This means working with the realtor's own lawyer and insurance company (if he has one), or with the realtor, directly. This aspect of the service, Fisher adds, "is at standard investigative rates, $51 an hour. And, for those without a lawyer on retainer, Fisher maintains a state-wide referral file of attorneys with broad, hands-on E & O experience.
At the same time, the Torrance investigative firm also has created a monthly newsletter ($120 a year) providing subscribers with the latest trends in E & O claims, "which include the mistakes that are popping up most frequently, the safeguards that are proving most effective and, of course, all legislation and appellate decisions affecting liability," he said.