Buyer sues agent over house price
Whose fault is it when a buyer pays far too much for a home? The buyer’s? Or the buyer’s real estate agent?
Marty Ummel, who in 2005 purchased a house in San Diego for $1.2 million, is asking the legal system to decide.
Ummel and her husband are suing their real estate agent, Mike Little from RE/MAX. You can read about the case here, in an intriguing story written by David Streitfeld in the New York Times.
The Ummels bought suit after another real estate agent left a notice on their front door shortly after the couple moved into their new home. The notice pointed out that a house up the street had just sold for $105,000 less than what the Ummels had paid for their home. The house that sold was the same size as the one that the Ummels had purchased. A second flier mentioned another nearby house of the same size that sold for $175,000 less.
The Ummels are claiming that Little pushed them into the sale, even though he should have known that the couple was paying too much for the home. The Ummels also accuse Little of exaggerating the positive features of the house.
Little, of course, denies this. One of the witnesses for the agent said in a court deposition that the Ummels failed to do what is expected of a “knowledgeable, sophisticated buyer” and are now looking for someone else to blame.
The case goes to court on Monday, Jan. 28. You can bet that real estate firms across the country will watch it carefully.
The sad truth is that buying a house is far more art than science, even with the help of a real estate agent. Determining exactly what a house is worth is a tough job. There’s no magic number that equals the absolutely correct price.
That being said, I find the statement of Little’s expert witness a bit insulting. Buyers hire agents in part to research recent area housing sales to help make sure that they are not drastically overpaying for a house. To say that this is really the job of the buyers makes little sense to me. If it is the job of the buyers to not overpay, then why is the real estate agent receiving such a large commission? Agents receive serious dollars whenever a home sale closes. They should be expected, at the least, to do everything in their power to make sure that their buyers don’t overpay.
In fact, I would think Mike didn’t do anything wrong in the eyes of the law, but he’s ethically wrong from hiding the pricing information of the area.
Yes he could choose not to show, as to avoid any form of misrepresentation. But if I’m not wrong, the principle is still the seller, who pays the commission for him.
In the event of any court dealings, isn’t Mike doing the correct thing of protecting his principle, the seller who’s paying his commission?
Laws vary from state to state, and I practice in VA. With that said in our state, a seller is who i work for if my buyers are not “clients”. If they are “clients” and not “customers”, in which you have a Buyer Broker Agreement in place- your only job is to your buyer regardless of the fact the seller is paying your commission. A Realtor has the job of finding the buyer the home of his choice, negotiating for the buyer with his/her terms, and hiring professionals to ensure all the other aspects of the sale. This is where I dont agree with Mrs. Ummel. The appraiser is the one who is ultimately responsible for determining the fair market value of her home. His license is riding on the line with each appraisal and so is his career, so to say that the appraisal was manipulated by over $100,000 is a far reach. We are not obligated to do a market analysis on a listing unless the client/customer asks. I wonder if the Ummel’s requested this?? It is possible that those low sales they talk about were in pending status when they were purchasing their home which would not publically disclose the final sale price until the sale commenced. Hmmm…Seems here that the appraiser should be one to blame and not the agent who found them the home and negotiated the deal so they could buy it.
Ummel would have requested for it wouldn’t she? One definite obligation of a realtor is that he/she has to advice his/her client the comparative around the area so they could make an informed decision.
I call that basic responsibility when it comes to working with a client, be it on the buyer or seller’s side.
I guess everyone’s waiting for the outcome to see how it goes.
i have read other articles about this case that lends a bigger twist: the selling agent was also a mortgage broker! Hopefully there was the presentation of disclosure of interest in his mortgage company!
Glad to see that this story is generating some comment. I just can’t get over the fact that the buyer’s agent didn’t think it was his job to make sure his client didn’t overpay.
The agent do owes the buyer or seller (whoever he’s working for) the fiduciary responsibility. Comparative price analysis is definitely one of them.
What a bunch of morons. Half of you idiots can barely spell, which certainly takes your uninformed opinions down yet another notch or two.
Andrea made one incredible point – had those sales gone to record when these Ummel schmucks wrote and signed their contract? If not, how would the agent or the appraiser know?
Secondly, value IS in the eye of the beholder (as long as it can be supported by an appraisal, and this was.) Did Mrs. Ummel look at any other 1.2 million dollar homes? Obviously this one was up to snuff with the competition, because she bought it. And if she didn’t look at any others, then she is indeed a fool and deserves what she got.
Also, have any of you even thought about percentages? She’s bitching and acting like a ninny because of one that sold for $175,000 less. In terms of a 1.2 million dollar home, that is about 14.5%. To relate that to us normal folks, that’s like buying a $250,000 home and finding out that one up the street sold for $36k less. Are you going to sue everyone you can get your hands on when you find out? If she’s stupid enough to drop $75k on this lawsuit, then does it really suprise you that she bought this house?
Maybe this house had features that made it stand out. Maybe it was more well kept. Maybe those other sales were distressed (i.e. divorce, bankrupt, owner addicted to crack and needs money…who the heck knows?)
Point being the seller thought it was worth it, the BUYER thought it was worth it, the appraisal said it was worth it, and the lender agreed it was worth it, the agent thought it was worth it and likely thought he had provided a good service to these people.
If you get married, but then notice that there is a better looking, smarter single person, do you dump your spouse and then sue your best friend for not doing a better job of advising you? NO. You loved what you saw, you did whatever you could to make the relationship happen, and then you spend your life being happy with what you got NO MATTER WHAT ELSE might be out there.
Or you could act like the Ummels. And waste even more money with an ignorant lawsuit.
My two cents.
I just have to say to the Ummel: are they nuts? is she trying to get some money just because the economy is bad? does she has something better to do?, I hope she can learn that in a market, you will always find homes (probably exactly the same as your) same sq. ft, same number of bedrooms, even built by the same builder in the same block and… some were sold for less or more money, that is a fact, and a real estate agent can’t do anything about it, also she needs to remember: “The value of something is what someone’s willing to sell it for and what someone’s willing to pay for it”
I hope she can get a life and don’t trouble her poor husband!!!
If the Realtor wasn’t also the mortgage broker, who ordered the appraisal, who lived in the area, who was a 26-year veteran, and didn’t live in the house that Jack built……….
Any updates on how the trial is going? This poor woman overpaid, and her poor agent hid the appraisal. Both were motivated by greed, and both should feel the current housing price plunge crisis refreshing, because its purging them both of the ills of materialism that caused Californians to be in thier current state of panic.
my 2 cents!