January 24, 2008
Taking a Buyer’s Agent to Court
This story, about a California couple’s lawsuit against their buyer’s agent, appeared in The New York Times this week. In 2005, the couple, Marty and Vernon Ummel, moved from the Bay Area to Carlsbad to be closer to their children, employing the services of a buyer’s agent in purchasing a $1.2 million home.
Mrs. Ummel now claims that the buyer’s agent, Mike Little, a veteran with ReMax, failed to inform them that other homes in the same development were selling at the same time for substantially less.
Mr. Little, who refers to Mrs. Ummel as “a nut job” in the article, plans to argue that the Ummels’ situation is due to their own lack of due diligence.
The story was The Times’ most e-mailed the day it appeared, and it has generated considerable comment, including this post on the Redfin corporate blog. Mrs. Ummels isn’t the most sympathetic character in the world: She’s someone whose bad side you wouldn’t want to be on. Also, people who buy $1.2 million homes aren’t exactly hurting for money.
But I find it interesting that this agent has divorced himself from all responsibility for the Ummels’ overpayment for the house. What did the Ummels pay him $30,000 to do? Unlock lock boxes? When people hire real estate agents, they expect them to look out for their interests. Agents have immediate access to information that normal people don’t know how to get to or don’t have time to find out, such as how much the house up the street just sold for. In this case, the Ummels claim that such information was concealed from them.
Whatever its outcome, this case will be interesting. It might open the door for similar suits if the Ummels prevail, or result in some new rules.
Your thoughts?
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Julie Lance said:
You have to blame the buyer’s a little here. You have do some homework yourself. Of course agents like to see a higher sales prices (higher the commission).
When we bought through an agent, it was like pulling teeth trying to get her to go lower than what was being asked. There were six identical units all on the market… you’d think at least one of them would go down on their price (and one did, by $30k!). However, if we didn’t push our agent to call around, I don’t think we would’ve gotten that price.
January 25, 2008 6:35 AM
Anthony said:
The final selling price of a home is determined by the SELLER and the BUYER only. Not the agent. In fact the definition of “value” is the price agreed between the BUYER and SELLER. An appraisal is an “opinion” of value. It is not scientific. Many appraisals are made based upon the appraiser’s opinion, which may have been formed without the appraiser wver seeing the interior of the comparable sale properties.
Notwithstanding the above, the Ummels are sophisticated buyers. The story says they canceled two contracts and fired an agent before they chose to purchase the one in question. Vern Ummel is no slouch. His own resume states: Vern managed a $70 million endowment campaign for the University of the Pacific where the goal was exceeded.
They knew what they wanted, agreed on a price and bought it.
Coincidentally, the real estate cycle (a natural occurance) started to decline shortly after they purchased their home. That’s life! If their agent could have predicted it he would be among the smartest people in the world. The press had been projecting the burst of the real estate bubble for years. It occurred later than they predicted.
Have the Ummels been damaged? Of course not. They have not sold their home and have not been damaged and have not suffered any loss at all. If they hold on to their property for the typical ownership term they will likely feel their home purchase was a bargain.
January 28, 2008 10:54 AM
Cindy Allen said:
Anthony, I agree that the Ummels are not the most sympathetic of characters. It will be interesting to see how this turns out, since the Ummels are alleging fraud, saying their agent withheld the info about the lower appraisals. The fact that the case is being allowed to proceed must mean the judge thinks there’s something to it. We’ll just have to see.
January 28, 2008 11:38 AM
Realtor Prevails in Nationally Watched Lawsuit | Redfin Los Angeles Sweet Digs said:
[…] A few months ago, I blogged about a lawsuit involving a Carlsbad couple who were suing their buyer’s agent, claiming he failed to tell them about nearby homes that sold for up to $175,000 less than the one they ended up buying. At issue was how much responsibility agents bear for the decisions of their clients. Here’s the original post. […]
April 15, 2008 9:07 AM