Realtors on the Firing Line Again

This is the Story on the Today Show this morning: Given the American obsession with litigation, it's somewhat amazing that legal experts could not recall a case of a home buyer who may have overpaid suing a real estate agent before Marty Ummel came along.

Legal and real estate experts say that Ummel and her husband, Vernon Ummel, should have done their homework better before purchasing their four-bedroom home in a luxury development outside of San Diego in 2005 for $1.2 million, a price that the Ummels say was as much as $175,000 more than what similar houses in the development sold for.

"We hired our agent because he was a real estate professional," Marty Ummel told TODAY's Ann Curry on Friday in New York. "He was expected to do his due diligence. And they have a code of ethics where they have to put the buyers first. I think he just wanted to go ahead and make his commission."

Looking toward retirement, the Ummels sold their home in San Francisco and moved to the San Diego area to be nearer to their children. Marty Ummel, 60, is a fundraiser for California State University; Vernon Ummel, 71, is an administrator at Dominican University.

"We worked hard and to think we'd done that all of our lives, and then for a Realtor not to tell us about the biggest purchase of our lives that there was a house selling for much less," Marty Ummel said.

Legal experts say that the Ummels' case may be the first of many as homeowners react to the crash in the housing market that has left many people with mortgages that are greater than the value of their houses.

MSNBC legal analyst Susan Filan told Curry that she doesn't think the Ummels will prevail in court.

"I don't think it's a suit that has merit," she said. "I think the standard of proof will be that this agent willfully, deliberately and with malicious intent withheld this information. This information that was allegedly withheld is public information. The bank wouldn't have given them the mortgage in the amount they got if the appraisal didn't back the house."

"We feel the appraisal was manipulated," Marty Ummel responded.

In her lawsuit, which is to go to trial in March, she says that the agent did not meet requests to give them a written appraisal until after the deal had gone through, telling them orally that the value of the house was the $1.2 million they paid for it.

She said the agent was negligent in not telling them about other houses that sold for less, including one three doors away that has a pool and sold for $105,000 less and another that was considerably bigger that sold for $175,000 less.

"You can't just say, ‘Oh, it's the same size. It's the same value.' What's the nature of the interior? Maybe it was painted all black," Filan said. "You can't just look at little boxes on a map and say that one should be the same value as that one."

Marty Ummel said that there are just 26 homes in their subdivision and all were constructed by the same builder and all are similar."This was a tract home. All of the homes were built at approximately the same time," she said.

Buyer beware
The defendant in the suit is essentially claiming caveat emptor - let the buyer beware. In a legal brief, the defendant quotes a real estate authority as saying the Ummels "simply didn't do what is expected of a knowledgeable and sophisticated buyer, and are looking for someone other than themselves to take responsibility."

"The value of something is what someone's willing to sell it for and what someone's willing to pay for it," Filan said. "Some of those houses may have gone for less than yours because the seller was so motivated, they didn't want the same amount that your seller did. Maybe they were going through a divorce and wanted to give their spouse less."

According to The New York Times, the Ummels have already invested $75,000 in their suit. They are asking for $105,000 - the difference between what they paid and what they feel the house was actually worth - plus their legal fees.

Vernon Ummel had no particular desire to pursue the matter, but his wife, who picketed the agent before filing her suit, was insistent. "She's very tenacious," he said. "Even though she's 114 pounds, she's not to be taken lightly."

For Marty Ummel, it's about more than their personal grievance. "There are other attorneys and Realtors who say we have a good case, we're trailblazers," she said. "And I think when all the facts come out, that we have a very good chance of winning, and if not, we want to change the industry. We want disclosure."

After seeing this story we had a quick meeting with our Realtors in the office and we talked about how this could happen and if it was something we have to worry about. We came to the conclusion that it is serious and that we as full time hard working agents find it petty and a case full of holes although we do have to be worried about other buyers jumping on the bandwagon. We have always been very good and making notes as to what our conversations and emails were about as well as keeping our files up to date as to properties that we have shown to our buyers. Now we will be also recording in our database the emails as well as the MLS #'s that we have sent to our clients to be able to minimize this type of accusation.

Some of the reasons we believe that this could have happened to these folks in the story would be

1. For Sale by Owner property which was not in the MLS
2. Inproper input into the MLS by the Listing Agent such as # of bedrooms could have caused the buyers not to see the property based on their criterea
3. Low Commissions (uneithically) are overlooked by agents when doing searchs
4. Property was purchased by an aquaintance or friend and was never public knowledge
5. Condition of the property / Time Frame of the Sales / Upgrades & negotiation

I noticed that the Lady also was saying that the Realtor and the Appraiser were somehow working together which I find very hard to believe and if this is true wouldn't the lender also be involved in the scam.

I know that Realtors are not always perceived in the best light and I hate to say this but many times it is true. In truth 10% of the Realtors usually do 90% of the business for very good reasons. They treat it as a business not a hobby and they truely do believe that the client comes first and this is why they are very successful. So when I read these stories about Realtors being bad or at fault it is so frustrating because I know how I work and many of my fellow Realtors work.

I think we need to watch this closely and see what happens in March