Lawyers make hay while the sun shines. http://seattlepi.nwsource.com/business/348265_realestate22.html?source=rss Unhappy home buyer, feeling misled on price, sues agent By DAVID STREITFELD THE NEW YORK TIMES CARLSBAD, Calif. -- Marty Ummel believes she paid too much for her house. So do millions of other people who bought at the peak of the housing boom. What makes Ummel different is that she is suing her agent, saying it was all his fault. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission. Real estate lawyers and brokers say the case, which goes to trial in North County Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase. "When your house appreciates $100,000 in the first six months, you're not quite as concerned that maybe the valuation was $25,000 or $50,000 off," said Clifford Horner of the law firm Horner & Singer. "But when your house goes down, you ask: 'Who might have led me astray here?' " Agents representing buyers rarely had the opportunity to make mistakes during the last real estate boom, in the late 1980s, because the job hardly existed then. For decades, residential transactions almost always involved brokers who, whatever assistance they gave the buyer, legally represented only the seller. The long boom that began in the late 1990s put an end to that one-sided world. As prices spiked, buyer's agents and brokers became popular as sounding boards, advisers and negotiators. The National Association of Realtors estimates they are now involved in two-thirds of all residential purchases. That makes this the first housing collapse in which large numbers of buyers had a real estate professional explicitly looking after their interests. The Ummel case poses the question: In a relationship built on trust, where promises are rarely written down and where -- as in this case -- there is no signed contract, what are the exact obligations of these representatives in guiding their clients through a sizzling market? "Agents have a lot of fiduciary duties, but they don't make money unless they close the sale," said Joel Ruben, a real estate lawyer in Manhattan Beach, Calif. "In an inflated market, there are built-in temptations to cut corners." The defendant in the Ummel case is Mike Little, a veteran agent with ReMax Associates. He will argue that Marty Ummel, who brought the case with her husband, Vernon, is trying to shift the blame for the couple's own failures of research and due diligence. "They simply didn't do what is expected of a knowledgeable, sophisticated buyer, and are now looking for someone other than themselves to take responsibility," Roger Holtsclaw, an agent who was hired by Little as an expert witness, said in a court deposition. Horner, the lawyer, said valuation is a tricky area for brokers. "Brokers aren't appraisers," said Horner, one of the writers of a guide to suing brokers. "They have no obligation to opine about value. But once they do, it becomes a gray area whether it's puffery or a misstatement of a known fact." Most people who made a bad real estate deal might wince and move on, but people who know Marty Ummel describe her as unusually determined. She spent a year picketing ReMax offices on weekends. Vernon Ummel, an administrator at Dominican University, gave her his permission to pursue the case, on one condition: "Don't tell me how much the legal fees are." So far, the bills come to $75,000, more than Marty Ummel's annual salary as a fundraiser at California State University-San Marcos. "I do not think I'm obsessive-compulsive, but I am 114 pounds of absolute perseverance," Marty Ummel said. It was bound to happen.
" Clifford Horner of the law firm Horner & Singer. "But when your house goes down, you ask: 'Who might have led me astray here?' " Ha, no sense in looking in the mirror. I'm sure if she put effort in dd of buying her home as she did picketing Re max, she wouldn't be in this situation. (Sigh) The broker, the baker, the candlestick maker, dem dere trial lawyers will get sumbody for sumtin.
A buyers agent looks after the interest of the buyer, no? I mean, when a buyer hirer's a buyers agent, the DD rest on the agents shoulders, it would seem.
The first issue is if the property was purchased at market value at the time of purchase. This can be determined reasonably close by reviewing comps and properties for sale. The appraiser and the loan broker are just trying to make the deal happen and their opinion of the value is used to justify the quality of the loan, but not indicative of true market value. The part where the agent is dead wrong is by representing the client for $30g's and then allowing the statement used against them to be "They simply didn't do what is expected of a knowledgable, sophisticated buyer..." That the agent withheld comps in order to earn that commission I'd say $30g's might just be enough incentive for an agent to place their interest over the client's. Our job is to inform the buyers and sellers so they can make knowledgable, sophisticated decisions. But, we all know that agents don't exactly have a history of being transparent now don't we? This is why I formed U.S. Real Estate Depot. Flat fee commissions are the future of real estate transactions. Since our commission is the same for every property our incentive is the same also. Not only that, because of the low flat fee there is not enough incentive to mislead the consumer just to make a deal. Besides if the consumer is supposed to be this knowledgable, sophisticated buyer then what is the agent doing for the $30g's, opening the front door?