In case you missed it, there was an article in the Metro section of Sunday's Washington Post regarding a new home in Loudon County where there was a significant mold problem.

The family got sick and sued the builder. The family won and was awarded over $4 million.

People buy new construction, in part, because they believe they won't have to deal with problems like this. Buying new construction is no guarantee of anything!

The other thing to watch for out of this is an increase in paperwork. Real estate related lawsuits are inevitably followed by an increase in paperwork. There will surely be new mold disclaimers, especially in new construction.

There is a lawsuit going on in Minnesota. The suit alleges that a real estate company and its agents directed clients to use a particular settlement firm without disclosing that other settlement companies had lower fees. The real estate company in question had a relationship with this settlement company and the agents whose clients used this company also received their commission checks more quickly.

I don't have all the facts in this case so I won't be judging what's true or not in this instance.

But it seems like a good opportunity to discuss how settlement companies are chosen.

First you should know that real estate firms and settlement companies alike are bound by something called RESPA (Real Estate Settlement Procedures Act). This act mandates that consumers receive disclosures detailing things like relationships between companies and also says that kickbacks are illegal! If you want more information on RESPA, HUD has a good site with detailed information.

Every client or potential client gets, early on, the RESPA form detailing all the relationships my brokerage has with other affiliated companies. I give them time to look through the list. If I know at that point in time that I'm going to be recommending a particular vendor on that list, I let them know. I also let them know that the choices are always entire theirs and that I receive no incentive to steer them one way or another.

When I'm sitting down to discuss settlement with a client I ask them if they have a settlement company they'd like to use. 99% of the time the answer is no. Since typically the only experience consumers have with settlement companies is when they close on a real estate transaction and since settlement companies typically don't nurture those relationships with buyers and sellers over time, most consumers have no idea who the settlement companies are.

If my clients don't know a settlement company or don't have a specific preference. I will give recommendations. Those recommendations are based on my knowledge of the companies and how they do their job. The most important consideration to me is that the transaction moves smoothly to settlement and that there are no unpleasant last minute surprises for my clients.

When I have a client for whom I know every penny is precious and could mean the difference between getting the house or not getting the house, I work diligently to choose the best settlement company with the lowest costs. Sometimes settlement companies will offer discounts or coupons and that's a great time to make use of those.

The bottom line is that consumers always have choices. It is a real estate agent's responsibility to disclose everything! It is also the consumer's responsibility to read the mountain of paperwork that they get. Neither agent or consumer should be let off the hook for not doing their part in this!