Buyer sues Realtor for home price falling!
January 25, 2008 by Gordon Corsie · 2 Comments
You read correctly!
As reported this morning on NBCs the today show, a buyer of a $1million+ property in Carlsbad California is suing the Remax agent who represented her and her husband because the value of their property has fallen.
Marty Umell claims her Realtor failed to disclose home prices in the neighborhood before she and her husband made an offer on their Southern California home and that her agent therefore is liable because they overpaid for their house.
The court will hear the case Monday, and this brings up the question, are Realtors liable for house prices falling?
Marty Ummel sues Remax.
The result of this lawsuit could have far reaching repercussions for the industry.
Do agents control the market? Should we be blamed if prices fall? Can we be held liable?
With the wealth of information on neighborhood homesales readily available today one would assume that any buyer would be exposed to an abundance of pricing and demographic information on any neighborhood they were interested in buying into.
The details of the story were not specified ie, when the house was purchased how old were the comparable sales, one of which sold for @$100,000 less 2 or 3 doors away from the subject property. It was also not clear the condition of the properties.
One thing is for sure that irrespective of the outcome, future transactions will contain another disclosure statement to be read and approved by all parties words to the effect
‘Buyers are aware that property values may increase or decrease at any time’.
Related posts:
Added to my RSS reader
Gordon, I do recall in the early 1990s when we would give our clients a letter disclosing that the price of the property may change in the future, and that they may or may not be able to sell the property for what they paid. That was the era during the California recession between 1990 – 1993. We may to start providing a similar letter for our client correspondence. It will be very interesting for all Realtors to follow this court case. Thanks for bringing it to our attention.
I have several thoughts:
1. People will sue for anything. There are those out there who refuse to take responsibility for their actions, including their own failure to check out the demographics or even merely asking the question of their realtor.
2. In my opinion it is absurd to blame a realtor for falling prices. Realtors don’t control the market pricing; anyone who has been paying attention to what is going on with the sub-prime mess would know that is one of the biggest problems facing the industry.
3. I think a smart agent will disclose everything possible, knowing there are people out there who will sue for anything. So that would include warning them that the market is very volatile right now, and what may seem like a good deal today may turn out to have cost too much money several weeks down the road. I don’t like the statement in the story that “one would assume that any buyer would be exposed to an abundance of pricing and demographic information on any neighborhood they were interested in buying into.” Perhaps a realtor should make sure their client is exposed to that information, rather than assuming it, just to cover all the bases.
4. I like the suggestion of the added disclosure statement that buyers are aware that property may increase or decreased at any time. But, isn’t that sad that it even has to be added?