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13 Comments on California Lawsuit
Cautionary tales are always good, however I think this case is more about risk than misrepresentation. This agent and his/her broker, took on a huge amount of risk when agreeing to be Realtor/Lender. Not a good combination and one I would never allow in my office. This buyer's argument on price of her house, in my opinion isn't valid. But is her argument that the Realtor didn't have her best interest in mind fly? maybe.
Since the client does not have access to the MLS database for know sales in the area during a specific time range, what about having a pay per usage for the client. Say, $15.00 an hr so that they can do whatever research they would like to do on the MLS database. This way a waiver can be created for the agent that may resolve any responsiblity for not giving all the required sold or listed properties in the area so that a client can make an offer on the property.
z... that sounds like just a way to avoid the duty you incur as a fiduciary when you agree to represent a client.
Besides, I don't think most MLSs would look kindly on reselling of the service.
(I haven't heard how this is turning out - any more news on it)
Personally I think there two points here.
The Agent (Mr. Little) was certainly representing the buyer. The article doesn't say whether or not he was also representing the seller. However, to have the Real Estate Agent also be the lender seems questionable at best. In the price range of $1 Million and up $100,000 is really not that big of a margin for the appraiser to vary. The property is appraised based on historical home sales in the area not future home sales.
However, the Ummel's should have done their due diligence. They are certainly not first time home buyers, they are not young and naive. I realize that people of all ages and socio-economic groups are abused financially every day. However, the Ummel's should have at the very least asked their agent to give them a market analysis of the home.
Ultimately though, they were required to negotiate with the seller for a price which they and the seller could agree upon. They obviously did that (since the Ummel's purchased the home) and now are having buyer's remorse because a house down the street is listed below their purchase price.
As the Real Estate Agent I would have suggested a Lender but would not have become the Lender myself or would have recommended a different Agent if I rather preferred to have the Lender's commission. Not that there was anything illegal (yet - for the law may change) but it certainly does not sound too ethical.
As the buyer, bells would have been going off in my head when the Agent (who is selling me the house) is also going to be my Lender? I do not think I would have agreed. I would have done some shopping around and had the banker send the appraiser. However, this does not guarantee the buyer is going to get a deal simply that it will get a deal of which the bank approved.
In the end I think the Ummel's either fell in love with the home and decided to buy (especially in a seller's market) and now are regretting their decision.
To suggest that the "Ummel's should have done their due diligence." is a bit odd. They had a buyer's agent (who was not also representing the seller). They are not licensed. Thay have a right to expect that their agent will tell them about all properties that might be available (especially any that could be considered a 'comp'). The fact that they might have been able to come up with this information with a certain amount of effort on their own doesn't get the 'Buyer's Agent" off the hook. As that agent, he had an obligation and apparently failed to live up to it. If any Realtor thinks under THOSE circumstances he should get off the hook then maybe we should all pack our bags and find a new profession because apparently we are simply not needed. That is, if the case turns on the "Ummel's should have done their due diligence."
He breached his duty if there was relevant information that he could have provided - but choose not to. It isn't simply a matter of disclosure (although it is certainly that too). It is a matter of his obligation to use what ever skill he has to the benefit of his client. If he didn't do that he deserves whatever he gets. That is even before getting into the issue of potential conflicts as the lender and potentially pressuring an appraiser.
I had a buyer agent and purchased my first home in April 2007 only to find out this month (almost a year later) that my next door neighbor purchased exactly the same type of house with an extra 1/2 bath 3 months before me for $81,500 less than what I had paid on my house - When buying I did the homework and checked online and asked the agent about comparable sales and the selling history of the house but he never told me about this one next door that had just sold in January - which would had been the perfect one to compare with, he only showed me the more expensive ones that sold before in 2006; I just realized that he did not show me that one on purpose to have me put a higher offer than needed on the house (more commission $ for him). Now looking back I feel stupid that I trusted the agent and I think that this happens often and they deserve to be sued...
Laura, If the house next door sold 3 months prior to your purchase it does sound like the agent was not doing what a buyer agent should. Protect the buyer. Don't assume, though, it was for a higher commission due to a higher price. More likely it was just to get you to buy something and the agent saw that you were ready to buy the house you did and if you had seen that comp probably would not have. Then the agent would have had more work to do.
I'm curious, did your "buyer agent" work for the company that had the listing for the house you bought or for another company that does listings. Many who claim to be 'buyer agents' use that term very loosely.