Wednesday, January 23, 2008

And Now Comes the Lawsuits!

Since I didn't see much mention of this story on the other blogs, thought I would post the link and some commmentary.

The New York Times ran a story yesterday on a couple in Carlsbad CA that is suing their Realtor.

Sounded like a bit of a shady deal to me, as the Realtor was also the mortgage broker and wouldn't show the couple the appraisal. The Realtor seems to be arguing that the couple should have done more research and due diligence.

I'm a bit confused by the Realtor's argument, isn't it the Realtor's job to help the couple determine if a house is a good buy, and provide them with information to support that claim? I mean, if a Realtor can't do that.....what purpose do they serve?

Of course, I am not saying the couple is faultless, they probably should have used a different broker....and they are squabbling over $100,000 on a $1.2 million home (approximately 8%).


Anonymous said...

"...isn't it the Realtor's job to help the couple determine if a house is a good buy, and provide them with information to support that claim?"

I believe NO. Now yes, I am a licensed real estate agent. I am no longer a "Realtor", because I have let my membership expire. I took night courses and test to get my license in order to A)learn and B)perform my own transactions for quality control and C)save money on all my future RE transactions.

I believe it would be the couples job to tell the agent, what a good buy to them is. This may be something different to everyone.

Then, it is the realtors job, to say according to what you guys are looking at, I think you will really like these 3 homes that fit your categories, etc.

I am sure some of the other RE agent bloggers on here can expand and have much more experience than I.

Great blog, good outlook. I look for your article everyday.

Gwynster said...

I think the attorney engines are just starting to get warmed up. Many, many more lawsuits to come as conflict of interest vs. Agent's responsiblility get tested in the courts.

Buying Time said...

Thanks Anon...

Got a nice chuckle out of your post, cause it sounds like you answered the question. That with a bit of homework, RE agents aren't that necessary (loved the quality control part....Mr.BT was really annoyed at the poor quality control we had with our two RE agent transactions).

Happy in SF said...

It's also pretty funny that the couple's legal fees have already reached 75k and the lady spent like a year picketing the agents office. This law suit is pretty stupid, yeah they had the worst agent in the world but I imagine you do not get into their income bracket by being mentally retarded PLUS, I'm sure they sold their Bay Area house for a pot of gold as well, maybe the should give the 100k to that buyer.
Basically that article was just a HUGE reminder to me that I'm in the most stable field in existence. I'm a paralegal and the firms I've worked for have never had a bad year. And as long as there are greedy folks like this they never will.

AgentBubble said...

I'm strongly against a realtor acting as a mortgage broker on the same transaction. Way too much conflict of interest in my opinion. A good realtor will provide comps that should help the buyers make an informed decision on whether a house fits their needs in every category (location, value, etc).

I don't do loans, never have, never will. I don't get involved in my buyer's financial status. It's none of my business. My job as a realtor isn't to qualify my clients or even make sure they can afford the house. That's why we have lenders. BUT, and you had to know this was coming, there are some things I do differently than other agents. Since I work only be referral, I typically will know my clients either personally or through a friend. As such, I feel more at liberty to tell them things about neighborhoods and houses that most agents won't say. I also have a special disclosure I've written that I have buyers sign before purchasing a house stating that they understand the value of their house is more than likely to decline after they purchase it. I attach comps and a trend analysis with it and it's signed as one big package.

And I agree with the comment above, that agents really aren't that necessary. I mean really, how many jobs can give you a $100K yearly income in a booming economy with such little education? FSBO transactions are quite easy and a I've helped many friends navigate through one to save on some $$. But, try buying a house and representing yourself and see how easy that is :-)

whistlebritches said...

What a bunch of morons.Next bubble, lawyers? Realtor are not financial advisors folks.If you want a financial advisor hire someone registered as such under the investment advisors act.Realtors are there to aid you in the transaction process.This includes showing properties, takeing listings, filling out contract forms,and makeing sure disclore requirements are met as well as other tasks in the transaction.Ask a realtor if a house is a good buy and most will say yes.what else do you want someone dependant on commission to say?

Sippn said...

I'm not a lawyer, but I play one with my teenagers:)

There's language in a purchase transaction regarding appraisals and their relationship to the purchase and financing.

The buyer is usu entitled to see it IF THEY ASK. The appraisal rarely matches the sales price, but most appraisers rarely exceed the sales or asking price if they know it (and usu do).

Sippn said...

This is going to be interesting.... buyers called and bought from owner/agent. Had already dumped 2 other agents. (probably wanted to "act as their own" and deal directly to save $$)

Greed may have been the problem on both sides.

Says same size home down the street sold for $100K less - but the back yard had privacy issues.

Even tract builders charge lot premiums for certain locations, the San Diego equivalent of $100K.

Are the homes exactly the same?

Patient Renter said...

I can't help but think of the RocklinToday realtor/writer and the related dicsussion over at Sac Landing...

All I can say is all Realtors could learn a thing or two from AgentBubble. Great post.