Realtor Prevails in Nationally Watched Lawsuit
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.
The national real estate community anxiously watched the case, knowing that if the plaintiffs prevailed, it would open the door for thousands of disgruntled homebuyers to blame their agents for their predicaments.
But agents could collectively exhale last week after a jury sided with agent Mike Little and not buyers Vern and Marty Ummel. Maybe people able to purchase a $1.2 million home on a golf course don’t engender much sympathy, down market or not. Here’s a portion of the Voice of San Diego story:
[T]he jury found that Little had executed a reasonable standard of care when he showed his clients, Vern and Marty Ummel, more than 80 homes in a house hunt that began in May 2005, ultimately leaving them to their decision to pay $1.2 million for their house two months later. In arguments delivered Thursday morning to conclude the jury trial that began last week, attorney David Bright said his client, Little, was being unfairly blamed for the Ummels’ house dropping in value.
However, some experts said the Ummels’ case succeeded in delivering a wake-up call.
Todd Lackner, a real estate appraiser not associated with the case, said the Ummels had “lost the battle but won the war” when it came to raising questions and delivering a hit to the reputation of real estate agents.
A common put-down of real estate agents compares them to used-car salesmen. Well, one difference between them is this: People who sell cars qualify their buyers. They won’t let someone buy a car they can’t afford, and they won’t sell a car to poor credit risks. They also stand behind what they sell.
Real estate agents assume no responsibility for the fates of their clients after the sale. Should they? Maybe. It doesn’t seem right that the National Association of Realtors can for years tell people it’s always a great time to buy when that clearly isn’t the case for many people. Teaching people about responsible home buying (i.e., saving for a down payment; renting vs. buying, etc.) would be a good alternative to the one-size-fits-all approach to selling property.
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greg m. ingerson said:
This person is obviously not living in realty.
The author claims, “People who sell cars qualify their buyers. They won’t let someone buy a car they can’t afford, and they won’t sell a car to poor credit risks.”
If this were true, there would not be such a think as “repossessed cars” would there?
The author also claims, “They [used car salesman] also stand behind what they sell.”
That is only for cars with a “warranty.” Most used cars are sold “As Is.”
The author states, “Real estate agents assume no responsibility for the fates of their clients after the sale. Should they?”
I say absolutely not. If we are to assume that adults are responsible enough to enter into a contact [buy a home, a car, stocks, etc …] , than we should be able to assume that they are willing to take the risk of a possible loss.
If we were to hold Realtors accountable for home prices dropping than where would it stop?
Should we hold our stock broker accountable if the stock takes a loss? No.
It is time that we as Americans draw a line in the sand and tell people that it is time that they learn to take responsibility for their financial decisions.
Realtors show houses, negotiated for the best deals, and provide all the information, but we can’t and don’t force our clients to buy homes.
As for the National Association of Realtors telling people it’s always a great time to buy, the truth is, it is always a good time to by as long as you are not planning on making a quick buck. Think long-term asset building. It is always a better idea to have purchased a home 10 years earlier.
If the people who are losing their homes wouldn’t have taken out loans on homes they clearly couldn’t afford, they would not be in this mess.
If you must blame someone, blame the banks that made loans to those without documentation of their income. Blame those who made “negative amortization” loans that added to the principal of the home every month so that the Buyer owes more each year that they live in the home. Realtors have no say in the types of loans that our clients decide to use and that’s the way it should be.
Sincerely,
Greg M. Ingerson
Attorney At Law
Real Estate Broker
April 15, 2008 11:36 AM
Billy said:
Well Cindy, I’ve heard some crap before but that “thing” you wrote has to be near the top. Asking a real estate appraiser (Todd Lackner) to give an opinion on real estate agents is almost as stupid as using car salesmen as examples of good character. Just goes to show, people have the right to free speech. I’m glad we also have the right to laugh at it.
April 15, 2008 4:37 PM
Cindy Allen said:
Billy, if you’ll read the blog post more carefully, you’ll see that Mr. Lackner’s quote is taken from the Voice of San Diego article. They asked his opinion; I merely included it. What do you have against Mr. Lackner?
April 15, 2008 5:37 PM
Cindy Allen said:
Mr. Ingerson, thank you for posting.
A few weeks ago, the compressor blew in my three-year-old Honda. I had 77K miles on the car and no extended warranty, yet they paid 75 percent of my $3,000 repair because they knew a compressor shouldn’t fail so soon.
Of course people sue their stockbrokers, if they can prove gross mismanagement, fraud, etc. Same with lawyers and other professionals who fail to do their jobs.
I agree that lenders are chiefly to blame for the mess we’re in. I also agree that a buying a home is a good thing, if you plan to stay in it a long time. Instead of this relentless, unqualified statement that it’s always a good time to buy, I’d like to see the N.A.R. truly educate consumers on the risks as well as benefits of homeownership. Then maybe we wouldn’t be so quick to blame them when things go wrong.
April 15, 2008 5:46 PM
An Agent Trying to Scare Up Business | Redfin Los Angeles Sweet Digs said:
[...] other day, I visited the Voice of San Diego Web site for my blog post about a real estate agent prevailing in a nationally watched lawsuit. While I was there, I found a [...]
April 17, 2008 8:47 AM
tim j said:
Note to Billy above: Todd Lackner was quoted in the San Diego Union Tribune before this trial started. It states: “San Diego appraiser Todd Lackner said many people in the industry are closely watching the Ummel case, and while Lackner said he believes the couple have a legitimate gripe, he doubts they will win in court.”……. “But appraisals are subjective. Did they pay too much? Yes, they absolutely did. But they bought it willingly. No one forced them to purchase that house.”
The quotes from this Refin post are from after the trial. I live in Carlsbad and know this area well. They overpaid for that house.
April 17, 2008 9:39 PM
Caryn Schmidt said:
Thank You, Mr. Ingerson for your post. I, as a broker, show houses, go over the contract with a fine toothed comb, offer real estate attorneys to work on their behalf as well as my normal fiduciary duties as a member of the NAR.
I cannot tell you how many times, I have expressed my opinion regarding their financing choices and the how the decision could affect them in the long run. However, as you said…we have nothing to do with the financial side of the transaction, geez, it took until this year for Mortgage brokers to have to even register with the state of Colorado. Any joe schmoe could possibly be a broker, for one deal! Whereas I receive an FBI background check, get fingerprinted, as well as carry an assload of insurance.
Regardless of what we offer as agents/brokers, Buyers willingly sit at a closing table and sign. No one forces them, trust me, If you don’t really want to buy a house, or cannot qualify, I don’t want to waste MY time. I will not let anyone in my car who is not pre qualified with a letter from their lender. Period. The car buying comment previously is total BS.
The mess we are in is NOT going to go away any time soon….and this “blame game” is not going to help our economy. Educate yourself, familiarize yourself, ask questions.
Caryn Schmidt
Real Estate Broker
Denver, CO
June 4, 2008 1:52 PM