Disgruntled home buyers suing their agent
Couple claims agent should not have let them pay high price
By DAVID STREITFELDNEW YORK TIMES
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 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?
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.
It is clear the Ummels did not rush into a decision: They dismissed one agent and canceled deals on two houses before Little found them a prospect on a cul-de-sac in a five-year-old luxury development. A deal was struck with the owner, herself a real estate agent, for $1.2 million.
Little also worked as a mortgage broker. The Ummels say he encouraged them to get their loan through him. Little ordered an appraisal of the house but did not respond to the couple's requests to see it, the suit charges.
A few days after the couple moved in, in August 2005, they got a flier on their door from another realty agent. It showed a house up the street had just sold for $105,000 less than theirs, even though it was the same size. Then they finally got their appraisal, which told them the house up the street was not only cheaper but had a pool.
When buyers have sued their agents in the past, the cases focused on problems with the property itself. After reviewing litigation records for the past five years, the National Association of Realtors could find no cases that revolved solely around the question of valuation.
The Ummels may be on the leading edge of the law, but they are unlikely to be alone for long.
"If you put someone into a property at the top of the market, you look really bad if it goes down," said K.P. Dean Harper, a real estate lawyer in Walnut Creek. "There are a lot of letters going out from lawyers to real estate agents saying, 'My client would never have purchased if you had properly evaluated the market conditions and the value of the property.' "
---Big WOW--- Do you need to mail a letter?
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