How's this for a crazy lawsuit?

[Rick Lee]

Second to last paragraph says it all.

Unhappy home buyer, feeling misled on price, sues agent
Last updated January 21, 2008 11:06 p.m. PT

By DAVID STREITFELD
THE NEW YORK TIMES

CARLSBAD, Calif. -- Marty Ummel believes she paid too much for her house. So do millions of other people who bought at the peak of the housing boom.

What makes Ummel different is that she is suing her agent, saying it was all his fault.

Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.

Real estate lawyers and brokers say the case, which goes to trial in North County Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase.

"When your house appreciates $100,000 in the first six months, you're not quite as concerned that maybe the valuation was $25,000 or $50,000 off," said Clifford Horner of the law firm Horner & Singer. "But when your house goes down, you ask: 'Who might have led me astray here?' "

Agents representing buyers rarely had the opportunity to make mistakes during the last real estate boom, in the late 1980s, because the job hardly existed then. For decades, residential transactions almost always involved brokers who, whatever assistance they gave the buyer, legally represented only the seller. The long boom that began in the late 1990s put an end to that one-sided world. As prices spiked, buyer's agents and brokers became popular as sounding boards, advisers and negotiators. The National Association of Realtors estimates they are now involved in two-thirds of all residential purchases.

That makes this the first housing collapse in which large numbers of buyers had a real estate professional explicitly looking after their interests. The Ummel case poses the question: In a relationship built on trust, where promises are rarely written down and where -- as in this case -- there is no signed contract, what are the exact obligations of these representatives in guiding their clients through a sizzling market?

"Agents have a lot of fiduciary duties, but they don't make money unless they close the sale," said Joel Ruben, a real estate lawyer in Manhattan Beach, Calif. "In an inflated market, there are built-in temptations to cut corners."

The defendant in the Ummel case is Mike Little, a veteran agent with ReMax Associates. He will argue that Marty Ummel, who brought the case with her husband, Vernon, is trying to shift the blame for the couple's own failures of research and due diligence.

"They simply didn't do what is expected of a knowledgeable, sophisticated buyer, and are now looking for someone other than themselves to take responsibility," Roger Holtsclaw, an agent who was hired by Little as an expert witness, said in a court deposition.

Horner, the lawyer, said valuation is a tricky area for brokers.

"Brokers aren't appraisers," said Horner, one of the writers of a guide to suing brokers. "They have no obligation to opine about value. But once they do, it becomes a gray area whether it's puffery or a misstatement of a known fact."

Most people who made a bad real estate deal might wince and move on, but people who know Marty Ummel describe her as unusually determined. She spent a year picketing ReMax offices on weekends.

Vernon Ummel, an administrator at Dominican University, gave her his permission to pursue the case, on one condition: "Don't tell me how much the legal fees are." So far, the bills come to $75,000, more than Marty Ummel's annual salary as a fundraiser at California State University-San Marcos.

"I do not think I'm obsessive-compulsive, but I am 114 pounds of absolute perseverance," Marty Ummel said.

[Porsche-O-Phile]

I don't know what's worse - the fact that people can be so stupid as to trust a commissioned individual who has no contractual relationship to them and who does not necessarily represent their interests, or the fact that "agents" can be so sleazy in the first place.

Here in CA, an agent represents the SELLER by default. If you want a buyer's agent, you have to specifically go looking for one. If you walk into a realtor's office, they represent the SELLER, not you, and are deliberately looking for ways to screw you in order to maximize the profit to the SELLER (and by extension, to themselves).

There is no provision whatsoever for a buyer's representative. I also find it highly suspect that a given agent is allowed to have dual relationship as a buyer's and a seller's agent simultaneously, something that defies logic and smacks of "conflict of interest". But it's allowed.

This is going to be interesting. Although I don't like the whole "everybody's a victim" mentality at work here, I can't say I have much sympathy for opportunistic scam artists masquerading as agents either.

[Rick Lee]

Around here we have buyer's agreements, where the realtor really does represent the buyer and the buyer can't just go finding properties on their own and try to negotiate a deal to leave out the realtors. A lot of realtors will make buyers signs them before they show them any houses, so as to not waste their time, only to have the buyer go somewhere else to try to buy a FSBO. However, these IDIOT plaintiffs did pay for an appraisal. Couldn't they have spent five min. reading the comps listed on it? Couldn't they have read their local newspaper to see what recent sales had gone for in that neighborhood? How can this IDIOT Ummel spend all this time picketing and suing, when she was too lazy to do the slightest bit of due dilligence of her own. I doubt the realtor even lied to them. All the realtor has to do is write the contract and then do the legwork after it's ratified. The appraiser and mortgage underwriter are the ones who really had the power to squash the deal because of valuation issues.

[gprsh924]

I don't even care if the realtor explicity lied to them and told them that the price was an unbelievable deal and shouldn't be passed up and would only come around once in a lifetime. They buyers in this case were too f*ckin stupid to spend 5 minutes researching housing prices in the area.

They make it seem like he forced them buy the house. No he simply tried to sell them on it and they fell for the pitch. How does this make it to court?

[Neilk]

Fine the sellers are idiots, but I can't stand real estate agents. Sure they represent you, the buyer! There's always another bidder for the house you want to buy, so they urge you to counter, rather than hold firm, knowing their commission would be bumped.

I wish I could write an agreement with my next agent, that their commission would be based on the initial bid with the proviso that it can't be more than a 10% discount from sale price. That way there would be nothing in it for them to push you to pay more.

[onewhippedpuppy]

For our recent home purchase, our realtor was a buyer's agent. They only represented us, and could not have represented both sides if we were interested in one of their properties. However, I never trust someone that makes a commission based on what I spend. What motivation do they have for getting me a better deal?

We always came better prepared than they were. Appraisals and comps are public knowledge, and it's easy to browse online to see what similar homes are selling for. The only excuse for making a bad purchase is stupidity, laziness, or the market going south (somewhat linked to stupidity).

[Rick Lee]

Lots of folks hate realtors, but I don't see how they have much incentive to mess things up. If a seller pays his realtor 6% (and that's negotiable), that realtor will split that 6% with the buyer's realtor and both realtors split their commission with their agency. Usually that means each realtor walks with 1.5% of the final sales price. You'd have to really bump the price for 1.5% of the difference to make it worthwhile and risk having an appraisal come in low, killing the whole deal, in which case, only the appraiser gets paid. Furthermore, since referrals are a huge parts of a realtor's business, I don't see how they much incentive to screw people. Sure, there are crooked or incompetent ones. But they don't last too long. My first one was in cahoots with the home inspector, who covered up some very obvious issues to make the sale happen quickly. I was a first time buyer and, while I thought I had done my homework, I never learned of the polybutalene pipes issue and class action settlement until I had one burst years later. Then I became an expert on it! But what was going after the realtor gonna do? Cost me more money and get me nothing in return.