Lawsuit of the Day: Buyer v. Broker
Or maybe yesterday. From Tuesday’s New York Times, an article that still sits on top of the Most Emailed Articles list:
Marty Ummel feels she paid too much for her house. So do millions of other people who bought at the peak of the housing boom. What makes Ms. Ummel different is that she is suing her agent, saying it was all his fault.Ms. 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.
It’s an interesting case. We’re a bit skeptical, but maybe that’s just us. Read the full NYT article, which contains more of the facts, then feel free to take our poll if you like:
Feeling Misled on Home Price, Buyers Sue Agent [New York Times]
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That's it! I've HAD IT with all these MUTHERFUCKIN brokers getting sued by these MOTHERFUCKING buyers!!!!!
First of all, this is a truly worthless article.
This agent is a BUYER's AGENT, not a seller's agent, and thus should've looked out after the buyer's interest - certainly there's a duty of care involved in that.
No such thing as a Buyer's agent. The agent gets paid a percentage of the sales price. Thus, even when the agent states that he is "your" (buyer's) agent, he is full of crap as he gets paid more for every dollar more you spend. The conflict of interest has always amazed me....and yet people hate lawyers and not real estate agents. Amazing.
I can't wait for real estate agents to go the way of travel agents.
So let me get this straight -- the gist of the suit is that other homes in the same neighborhood were selling for much less? How did the buyers not learn that on their own? It would take 5 minutes to find that information on the internet. Didn't they ask the agent to send them a sampling of comparables to evaluate the price? And from the article, it seems as if they moved in before they received an appraisal! Talk about reckless.
An agent is there to help yu, but not to hold your hand. Everyone knows they just want to close deals. You have to evaluate the facts yourself.
Normally, I'm anti-litigation, but an industry that is a comfortable with conficts of interest (not to mention the unauthorized practice of law) needs to be reigned in. Maybe the plaintiff has a frivolous case, but she also has a point.
Sue the bastards
10:10 nailed it. +1 to him/her
The agent's "conflict" is no different than many other professionals'. Law firms get paid by the hour, which incetivizes overstaffing, padding and inefficiency. Plaintiffs' lawyers are often incentivized to take quick settlements just to get some cash in the door. And agents aren't going to advocate for lower prices on your house.
Don't get me wrong, I think agents are pretty worthless in the age of the internets, but their inherent "conflict" is no reason to open up another category of expensive and pointless litigation.
What an ass. She needs to suck it up and grow a pair. She made a bad purchasing decision because apparently she knows absolutely zip about economics. Boo hoo, lady, go take a few college classes. Idiots like this are why my investments are now in jeopardy (and all I can afford is capital investments, since the predatory banks and greedy real estate investors saw to it that my generation will be permanently home-less, meaning we won't own homes).
People like her are what sucks about America.
Correct me if I'm wrong, but if you hire any agent, they have a duty of loyalty and a duty of care towards you. The agent represent you and your interests. Any profits they make to your detriment they have to disgorge.
Now obviously there is a conflict of interest created by the particular way in which real estate agents, buyer's agents that is, are paid. But that fact does not change the law. If they breached their duties, then they are liable.
WE DIDN'T EVEN KNOW THOSE HOMES WERE THERE
10:10 is wrong. There are buyers' agents. I have had two myself. They signed contracts with me in which I agreed to pay their 3% commission, if the sellers' agents wouldn't split the 6% they were due to get. Sure they want to see a deal get done, but that was why I hired them in the first place.
lmao @ 10:33
Real estate agents are among the lowest forms of life. I talked to one who actually told me there is never a bad time to buy or sell. They'd do or say anything to get their client to buy or sell. Their lobby has viciously opposed every effort for internet companies to accept lower commissions on sales. Thankfully, DOJ antitrust and FTC are investigating. The current commission rate -- usually 3% per side -- is absurd considering that home prices have doubled in most areas in the last 5 years. So, they get twice the money to sell the same house as 5 years, even though inflation has been a small fraction of that amount. Any lawsuit to bring down these hucksters is welcome by me.
I think by "huckster" you mean "buckster," or one who is more likely than the average individual to get buck (rowdy, crazy, etc.) should circumstances call for said buckness.
But I don't know - you may have invented the word. If so, congratulations!
If the agent advises a principal on the amount of an offer and conceals information from the principal material to the principal's decision, (such a comparable sales) then fraud occured.
The real question is what is the measure of her damages (assuming the concealment can be proved)?
Anyone who answered this survey with any response other than "don't know enough" should NOT be practicing law.
It will likely come down to whether the Broker acted in "good faith." Tough to prove he didn't at trial, but not impossible.
Damages do pose an interesting issue - surely the broker wouldn't be held liable for every conceivable loss of value in the property and it's unlikely that the court would allow for force a transfer of title. Maybe have the house put on the market and see what it sells for, with broker liable for the difference?
Real Estate agents are bad, but the real scum are mortgage brokers. As for this suit I think it depends on the facts. If this agent was asked about the comps in the area and selected ones that made him look good, while leaving out others then there might be a good suit. Sure the buyers should have looked at comps themselves, but if your agent tells you one thing you are prob going to take it face value. Not me because I know what scum there is in real estate, but most people.
11:06 - Anyone who cannot understand what "potentially" and "dubious" mean should NOT be poisoning the survey results with his/her stupidity.
So, yes, there are buyer's agents. 10:10 is a horse's ass. If this agent was a buyer's agent, he's a jerk. If not, CAVEAT EMPTOR, BABY.
In the age of craigslist and rent.com, why do brokewhores still have jobs? Not only that, but in NYC they're charging 15% of YEARLY rent as the brokewhore/realwhore fee!! We're talking rent averging $2700 a month!!!
Unreal. I refused to use one when I moved even though my firm would have reimburse me for the brokewhore/realwhore fee.
In the age of craigslist and rent.com, why do brokewhores still have jobs? Not only that, but in NYC they're charging 15% of YEARLY rent as the brokewhore/realwhore fee!! We're talking rent averging $2700 a month!!!
Unreal. I refused to use one when I moved even though my firm would have reimburse me for the brokewhore/realwhore fee.
In the age of craigslist and rent.com, why do brokewhores still have jobs? Not only that, but in NYC they're charging 15% of YEARLY rent as the brokewhore/realwhore fee!! We're talking rent averging $2700 a month!!!
Unreal. I refused to use one when I moved even though my firm would have reimburse me for the brokewhore/realwhore fee.
Realtors (aka Used House Salesmen) are the scum of the earth, less honest and slicker than used car salesmen and therefore getting paid even more.
How many other businesses allow someone with basically zero education, not even a college diploma, to earn six figures right away? Remember, EVERYTHING a so-called "agent" says to you is contrived to suck out that huge commission.
10:36, read your own words. Your agent agreed to get paid a % of the sales price of the home. The MORE you paid for the home, the MORE your agent got paid. In my book, that is incentive for your agent to ensure you paid MORE for the home. She can call herself your "agent" all she wants, but her financial incentive is to screw you. Now certainly there are scrupulous agents out there, but the system is set up to incentivize both the buyer and seller agents to seek a higher sales price.
I've had an agent for every home I've purchased (3), and they all claimed to be my agent. I treated them like Reagan would: trust, but verify.
is there another way to structure the way you pay a 'buyer's agent' to avoid the conflict of interest.
such as:
paid a percentage of the amount your house sells for less than the average of a comparable home in your area.
would this work?
11:25, "If this agent was a buyer's agent"? If this agent WERE....statements contrary to fact take the subjunctive. Did you graduate from High School?
The realtor took advantage of an elderly couple. I also think the issue is more how to determine damages.
If a seller knows material adverse information regarding the value of the thing to be sold, the seller has a duty to disclose said information to the buyer. This is common law.
If the broker had known (and failed to disclose) about termites in the house, there would be no question as to liability. This would be the case even if the buyer had failed to do a termite check, wouldn't it? (Correct me if I'm wrong -- it's certainly possible.)
In this case (if the allegations are to be taken as true), the broker had local information suggesting the imminant bursting of the real estate bubble. Is that less material to the value of the house than the presence of termites?
11:27 is right on target, they are just used house salesmen. Buyers' and sellers' agents are both out to screw over the buyer under the current commission scheme. On top of that, they're getting kickbacks for steering buyers to their favorite mortgage broker, escrow firm, and title insurance company. While plaintiffs' and defense attorneys have incentives to keep litigation alive, they're not getting kickbacks from the judge for doing so.
@ 11:47: I think it would be a pretty large departure to require the seller to speculate about what the market will do in the future. Termites directly lower the value of the home, or cost a known amount to fix. The price of other homes, which may be similar but are not identical, may or may not mean anything. If it were that easy to predict the end of a speculative bubble, they wouldn't happen.
I only vaguely remember Property and I used the crappy Singer book. Nevertheless, I seem to recall that even a buyer's agent does not owe a fiduciary duty to the buyer unless the K specifically says otherwise, and it usually doesn't.
I used to be an apartment rental broker in Tallahassee but then went to law school (Ave Maria '05) and went to work for biglaw at CWT in NYC. I know from experience that apartments are cool and fun to live in.
What's an "Ave Maria?"
Will someone represent me? I own some greatly-devalued tulips.
The lawsuit is premised on the fact that the broker incorrectly represented that they were selling a home at a market rate . It has nothing to do with what happened to prices post-close. The former point has merit from a fiduciary obligation point of view, the latter is meaningless.
Ha! Finally Realtors realize what Stockbrokers have known for years: when your asset (home, stock) goes up, the client is a genius; when the asset goes down, the broker is an idiot and should be sued.
If I used half of the tactics of a realtor or mortgage broker, the SEC would shut me down in two minutes. Why are homes not securities?
Ha! Finally Realtors realize what Stockbrokers have known for years: when your asset (home, stock) goes up, the client is a genius; when the asset goes down, the broker is an idiot and should be sued.
If I used half of the tactics of a realtor or mortgage broker, the SEC would shut me down in two minutes. Why are homes not securities?
I wouldn't put anything past those slimey real estate agents. There's a case in Delaware right now that has even stronger facts against the agent: A seller planned to sell her house at $150K. Her listing agent presented her a buyer offering $96K. She reluctantly took it. The buyer at $96K resold it the same day for $130K. The listing agent for the original owner obtained the buyer for the second owner and got commissions on both sales. Scummy much?
The case is Bartron v. Pettit (06C-05-268-JOH) and a related case, Eller v. Bartron (02C-03-221-JOH), currently in Delaware Superior Court.
The whole system is Jacked more than a Humvee on roids.
Here's a good article for those in search of enlightenment:
http://www.bnglawyers.com/CM/Custom/cfa.pdf
The fact that the agent works with the appraiser creates an environment that is ripe for fraud. Have you ever noticed that the appraisal almost always comes in at or near the asking price? Even with "comps" there is no true value of a house. The numbers are made up, the buyers are stuck with homes they can't afford, hedge funds become valueless, and the global economy is jeopardized. Clean Capitalism is good, but what we have now is corrupt capitalism, hijacked by unscrupulous characters who will do anything to make a buck. The whole system needs to be torn down and rebuilt, and until it is the global economy will remain a glass menagerie castle built on a foundation of sand.
"Causal Nexus" the truth will set you free.