Tuesday, January 22, 2008

Buyer Pays Too Much for House, Sues Real Estate Agent

A lot of buyers paid too much for their house during the housing boom. Although most sit around lamenting their own folly, one California buyer is taking a different approach--she's suing her agent.

(eFinanceDirectory) After dismissing one agent and cancelling deals on two houses, Marty Ummel and her husband Vernon hired Mike Little, a veteran agent with ReMax Associates.

Little, who happens to be a broker as well, found the Ummels a $1.2 million cul-de-sac in a luxury development and encouraged them to get the loan through him.

The Ummels agreed to the deal in August of 2005 even though they did not get a chance to see the appraisal Little ordered. Marty Ummel claims Little assured her the house was a good buy.

Shortly after the Ummels moved into their home, they found a flier that had been tacked to their door by another real estate agent. The flier was an advertisement for a similar house in the same neighborhood. The house had recently sold for $105,000 less than what the Ummels paid.

As it turns out, there were several houses in the development that were comparable and selling for much less. One was sold the same day as the Ummels' for $175,000 less.

Upset with her agent, who made $30,000 in commission on the deal, Marty Ummel picketed ReMax on weekends for a year straight. She also filed a lawsuit against the broker and the appraiser. She received modest settlements from both.

Ummel is also suing her agent, claiming that he hid information on other homes in the neighborhood and withheld the inflated home appraisal until after the deal had been made.

In a telephone interview with The New York Times, Little maintained his innocence in the case, calling the lawsuit 'ridiculous.'

'The lady's a nut job. I didn't do anything wrong,' said Little.

The Tip of the Iceberg?

Although the real estate deal occurred in California (where property values have been inflated for years), it has national significance. Home prices are falling across the country. Real estate brokers and lawyers say the Ummel case, which is unprecedented, could encourage other buyers to cry foul.

The question is: who is really responsible in such cases? Is it the agent, whose job it is to guide the buyer within the constraints of the law? Or is it the buyer, whose job it is to show responsibility and due diligence when making a major purchase?

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