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View Full Version : Unhappy home buyer, feeling misled on price, sues agent



TimH
01-22-2008, 05:20 PM
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.

Concordia...41
01-22-2008, 05:37 PM
Interesting because it's the buyer suing the buyer's agent, but if she had time to picket the Remax office every weekend for a year, seems like she would have had a few hours here and there to check prices before she made a major decision like buying a home. :rolleyes:

Or maybe she could have spent those weekends making improvements to the home so that it would continue to appreciate in the declining market...

Ron Williamson
01-22-2008, 06:06 PM
Caveat emptor?
R

Gary E
01-22-2008, 06:26 PM
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.


So we are lead to believe that these sales people have ethics... yeah, untill they see the commish check about to fly out the window then the ethics are tossed first...

Joe (SoCal)
01-22-2008, 07:13 PM
So we are lead to believe that these sales people have ethics... yeah, until they see the commish check about to fly out the window then the ethics are tossed first...

Absolutely INCORRECT
Point of fact the FIRST question both buyer and seller ask when negotiating the price of the house and it has come to a financial hurdle is will the agents take a hit on their commission. Also a fact this happens to me not on a little starter home for a young couple Nooooooo this ALWAYS happens with a $3 million dollar 3rd weekend home that they are buying CASH. They always ask if us agents can take a little off the commish. Unless its a total deal killer usually I risk and win by saying no and the deal goes through anyway. But if its a young couple just trying to make the number I ALWAYS offer to reduce my commission. Just good Karma not just good ethics. Not ALL Real Estate agents are the stereotype you've fabricated. :rolleyes:

Concordia...41
01-22-2008, 07:23 PM
So we are lead to believe that these sales people have ethics... yeah, untill they see the commish check about to fly out the window then the ethics are tossed first...


Actually most do have ethics and we don't (and won't know) enough about this individual to know. From the face of it though, I don't know how the agent could hide information that is generally public knowledge. :rolleyes:

I'm sure her point is that she hired a buyer's agent and thus had an expectation to rely on his advice, which has some merit, but I'm just crass. Caveat emptor.

Kinda like the guy that called our office earlier this week and wanted to sue [police agency] because he was arrested by a plain clothes detective who never said he was a cop. DUH! The caller went on and on about how some guy just came up and said he wanted to ask a couple of questions. The next thing he knew (according to his story) two other guys handcuffed him and threw him in the back of a police car.

I could not help but ask, in my most serious tone, "Could that have been a clue?"

People. :rolleyes::mad:

Joe (SoCal)
01-22-2008, 07:29 PM
Tyler you're sexual fascination with me is troubling, and to be honest makes me throw up a lil in my mouth. :(

JimD
01-22-2008, 07:34 PM
...if she had time to picket the Remax office every weekend for a year, seems like she would have had a few hours here and there to check prices before she made a major decision like buying a home. :rolleyes:...

The rest of her time is taken up picketting her cell phone service provider to get out the the contract she signed of her own free will.;)

Concordia...41
01-22-2008, 07:35 PM
The rest of her time is taken up picketting her cell phone service provider to get out the the contract she signed of her own free will.;)


Hope she has a lot of time. :D ROTFLMAO!

Joe (SoCal)
01-22-2008, 07:41 PM
Joe, after watching your Vids I am convinced you would make a good bottomhttp://www.woodenboatvb.com/vbulletin/upload/images/icons/icon12.gif

http://www.woodenboatvb.com/vbulletin/upload/images/buttons/report.gif Line Crossed :mad:

Gary E
01-22-2008, 08:01 PM
Your so predictable Joe, and so wrong and off the subject. The COURT is letting the suit go forward, that tells me it's got at least some merrit.

Tylerdurden
01-22-2008, 08:03 PM
http://www.woodenboatvb.com/vbulletin/upload/images/buttons/report.gif Line Crossed :mad:

Quote:
Originally Posted by Joe ( Cold Spring on Hudson ) http://www.woodenboatvb.com/vbulletin/upload/images/buttons/viewpost.gif (http://www.woodenboatvb.com/vbulletin/upload/showthread.php?p=1743865#post1743865)
How many times this week have you and Milo shared kiddy porn ?

What is it they say, Just cause you post it doesn't make it true.

Line crossed Joe..... except I don't need scott to protect me. Pussy.

Chris Ostlind
01-23-2008, 07:38 AM
Joe and Mark

Another interesting thread being ruined by you two twits and your incessant bickering about nothing.

Come on, Boys... This is so freakin' tiring. Take this crap offlist and leave the place in some semblance of peace.

That, or agree to meet in some middle ground location with 2x4's and bash yourselves silly. Privately.

Sheesh!

Ian McColgin
01-23-2008, 07:54 AM
Most real estate professionals really do have ethics and have both legal and ethical codes to follow.

The growth of purchaser's agent v. seller's agent is a bit of a problem. I think it better that agents more clearly have their interest in bringing the parties together, trying to help each understand what's possible and what's not, but not be tied to either side. That at least keepsbolth sides trusting their own diligence.

Anyway, the facts here will matter a lot. If the agent can be shown to have withheld known information which he or she had a duty to reveal, the agent should lose. Somewhere there's an attorney who is really confident in the case or every bit as delusional and the purchaser appears to be, at first blush, because the legal bills are not recoverable without a win or a market change and possession of the house.

ishmael
01-23-2008, 09:34 AM
I'm with Ian and Joe on this. My mother was a realtor, and was a very ethical person who also had to abide by certain rules, particularly around disclosure. They vary from from state to state, but if this guy didn't abide by them then he's liable. And, I'm sure there have been in the recent boom market unscrupulous people, who took advantage and moved on.

I'm all for caveat emptor, but property with a dwelling on it is subject to pretty strict regulations in most states.

brad9798
01-23-2008, 03:03 PM
That is a ridiculous lawsuit ... pathetic and maddening.

I hope she loses ... and has to pay court costs too!

Value is determined by seller and buyer ... and is validated by an appraisal.

If I can sell my house for more than market value, of course I will.

Bob Cleek
01-23-2008, 04:03 PM
The jury's still out on this one, guys. The issue has been percolating for a long time. It's about "dual agency," which to anyone other than a "Realtor(tm)" is an oxymoron. The real estate industry can't have it both ways. You can't "represent" both sides of an arm's length bargain without a conflict of interest. Add to that the exorbitant fees charged and the burden on the realtors increases.

Here's how it works in California, where the suit was filed and where it will be decided. You want to buy a house. You go to a real estate office and the real estate "agent" or "broker," (no difference in the licenses for the purpose of this discussion... a CA "agent" works under a "broker's" supervision) whose business association, the "Board of Realtors(tm)" controls the "Multiple Listing Service ("MLS")," shows you what's available. As a practical matter, there is little chance of your knowing what's for sale unless you look at the weekly MLS book, which lists the properties "listed" by "Realtors(tm)" who have contracted through the "Board of Realtors" to participate, for a hefty price, in the MLS. You have to be a "Realtor(tm)" to get a copy of the MLS book and to subscribe you have to sign a contract that you will not allow anyone (i.e. buyers) to get their hands on a copy under pain of mortal sin. (Sure, there is the occasional "For Sale by Owner" in the want ads, but fuggedaboudit!) The MLS contract requires participating realtors to share sales commissions. The "listing" agent or broker sets the commission with the seller, usually six percent, or five if the seller is savvy. On a million dollar suburban residential property (Not uncommon in CA these days), that's fifty or sixty thousand bucks. By the MLS contract, the "buyer's agent," i.e. the realtor that shows the MLS listing to the buyer and "represents (HA!) the buyer," is entitled to half the commission and the "listing agent" the other half. Remember, kiddies, the SELLER is paying the commission. The "closing costs," which include actually getting the loan and the title company's preparing the closing documents and recording the deeds is paid for out of the buyer's pocket on top of it all. The Realtor(tm) generally will get an additional "kickback" for referring the buyer to the mortgage broker or other lender and from the title company for the referral. Okay so far?

BUT, what happens is that the buyer's agent tells the buyers, who often are making the largest purchase in their lives, far beyond their level of financial sophistication, that the buyer's agent is "representing" them in the negotiation of the deal. Generally, the "buyer" will never be allowed to even meet the "seller" until the deal is closed.

The real estate industry has labored long and hard to sell this scam to the public. Another example of a "sales" job (like stock brokers and insurance salesmen) being marketed as a "profession." Few buyers even know that all they have to do is cross out the commission sharing provision on the sale contract and tell the seller there's no "buyer's agent" to pay in order to cut the commission in half. (Can you think of any other business where the buyer pays the salesman a six percent commission for the privilege of buying his wares!) No seller's agent is ever going to cut their commission in half when they both list the property and "represent" the buyer, either, even though they are taking a "double dip."

So, ask yourself, is it smart on a million dollar house purchase to rely on the "representation" of "your" "buyer's agent" who stands to be paid maybe twenty-five or thirty thousand dollars by the SELLER for nothing more than essentially being lucky enough to have been the one to answer the phone when you called the real estate office to see what they had for sale? Do you think, with twenty-five or fifty grand waiting for them to pick up off the table, that they can "represent" your financial interests in the deal by securing the seller's agreement for the LOWEST price? Fat chance! Oh, they'll make a pretense. Knowing the seller has added a little padding, they'll suggest you offer a "bit lower than the asking price... but don't insult them or you might lose the deal." Cute little game that stupid people fall for all the time. Fact is, most people buying a home are uncertain, if not terrified, and rely on "their" agent with blind faith. Those agents are the ones who are always telling us "it's a great time to buy" when the market is in the toilet, and "a great time to sell" when prices are high. They are taking their cut either way.

The same goes for the commission rates. They will claim all day long that they are "negotiable," but just try it! Ask yourself, why is a five percent twenty-four thousand dollar commission charged on a four hundred thousand dollar house sale while a fifty thousand dollar commission the going rate for a million dollar house, when selling the two properties involves essentially the same amount of effort? Hard to figure that a high school drop out gum-snappin' divorcee with a leased Mercedes is worth that much to tell you "You'll just love it!"

In the last hot market, realtors fed off the fat of the land just as the mortgage brokers and banks did. "You can afford it!" was their battle cry. Can you imagine a realtor telling a couple of young kids about to get into a subprime mortgage way over their heads, "Don't do it... you can't afford it?" No way, Jose!

Now that the horse is out of the barn, the chickens are coming home to roost. Not that I can shed crocodile tears for the stupid purchasers who failed to use common sense, either. But, hey, they never held themselves out as "professionals" "here to represent your interests" for six figure commissions, did they?

That said, there are reputable real estate brokers and agents out there. They may not have made as much as their less ethical comrades in the last hot market, but they will, I suppose, weather the "shakeout" a lot better. The slow horse for the long ride, as it were.

Caveat emptor does apply, but remember, real estate sales have long been regulated by the government specifically to protect unwary consumers. The same principles have already been applied to regulate securities sales and there's no reason the same shouldn't apply to real estate. This lawsuit may well be another step in the right direction. Time will tell. Maybe the Realtor's(tm) gravy train is rolling into the station at long last.

P.L.Lenihan
01-23-2008, 07:53 PM
Like a shot of fresh air slicing right through the smoke screen Mr.Cleek! Thank you,thank you thank you...........!!


Peter