I just love reading the papers. They're better than soap operas. Or E Television Network. Or Celebrity watching. Because they take something truthful and/or a part of a truth and create this beautiful, fake half truth that appears to be real by the headline.
Today Davide Streitfeld wrote an article entitled Unhappy homebuyers turn on agent. Please note this was on the front page of The Californian. Of course I was interested in reading the article. It brought a pang of guilt and helplessness to the pit of my stomach. Apparently the Ummels bought a home in Carlsbad in 2005 with the help of an agent and are now suing the agent because they "feel they paid too much for (their) house. So do millions of other people who bought at the peak of the housing boom".
Well, certainly many people are going to "hellya" that statement. The information on the front page of the article states information about the trial, about the difference between appreicating markets and depreciating markets, and how the recent housing boom did not really affect many buyers agents in this regard until prices started plummeting. If you didn't turn and read the remaining part of the article, you wouldn't have seen the real story behind the front page story. I'm sure that many people who have bought recently thought, "well, gee, that's not a bad idea. I think I'll sue my agent who helped me buy this place. Its not my fault I bought this home and now its worth $150K less than what I paid two years ago." The first part of the article pretty much encourages the reader to agree with this line of "logical" thinking.
Funny thing, the rest of the article told the real story. The agent who was also the lender in the transaction apparently did not share the appraisal with the buyer until the end of the transaction even though the buyer had requested it. Whether or not this can be proven or not is another issue to be resolved in court. Also the comparisons of two similar homes that had recently closed were around $100K less than the home that closed. The home buyer found out about another home's price by a flyer from a listing agent when she first moved into her $1.2M Carlsbad home.
So, this is not a typical case of a buyer purchasing, the value depreciating, and the buyer suing the agent.
Mrs. Ummel has taken it upon herself to spend $75K in attorney's fees and has spent weekends picketing the real estate office. Obviously she feels very passionate about this real estate agent not keeping with his fiduciary duty. This particular case is poignant and I empathize with her position. It is unfortante that her agent did not provide her with information about the other properties sales prices and did not present her with the appraisal until after the transaction was complete.
There are two things that I would like to point out about this article:
- This article creates an emotional reaction to a buyer who feels she was wronged by an agent. This makes for a sensational newspaper article and front page bling. Unfortuantely the example in this article is not the typical situation, and I think it is wrong to make this buyer the example and not the exception. The thing about real estate, the stock market, or any other market driven sale is this: the market or price an item is sold at is solely determined by the buyer and seller. Bottom line. This is basic economics. The market isn't driven by an appraisal. It isn't driven by a market analysis. If a buyer thinks an item is worth X amount and the seller agrees to that price then that is the market price. I do think it is prudent to have an agent you trust review recent sales comparisons. I also think reviewing the appraisal is important too.
- The second thing I'd like to address is where is the personal responsibility? I get so tired of everyone blaming someone else for their problems. I bought this house at the top of the market (see point 1. above for definition) and now I am going to blame the agent who represented me. Great! Now I am not the one who is responsible!! Now I can blame someone else! Now I can sue someone!! Call my attorney! The result? Another page for all of us to sign when you get ready to buy or sell a home in California now. What ever happened to the caveat of buyer beware? That was back in the day when a real estate contract was one page. Ah, the good old days.
Basically I want to speak my word here. It is very unfortunate the situation that a lot of homebuyers are upside down in their homes. I feel horribly for those who are in this situation. Fortunately there are new laws to help those in some of these situations. If we as agents had crystal balls to tell the future of prices and the market, we would all be very rich. Most of us agents are good people and we do the best we can to help our clients make the best decision possible at the time of the transaction. It is unfortunate that the press continues to target the atypical situations as front page fodder for readers.
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