Who takes the blame when a buyer over-pays for a property? That question is about to be answered in a North County, California courtroom.
It seems that disgruntled Buyer Marty Ummel thinks that she over-paid for her new home, perhaps as much as $100,000 too much. How upset did that make her? Upset enough to have sued her real estate agent, her mortgage broker and the mortgage company's appraiser. The claim seems to be that they (the professionals knew she was overpaying, but withheld information from her so as not to "lose the deal." The appraiser and mortgage broker have already "settled out" but the case against the agent will be presented in court next week.
Its easy to write this one off as another case of someone refusing to accept personal responsibility for a mistake or for a bad decision. Blaming the other guy it seems is the "american way."
The buyer may have taken guidance from the agent and placed misplaced reliance on the appraisal, but shouldn't she have done some due dilligence of her own? With web services such as Zillow.com and Trulia.com its pretty easy to check what other properties in any given neighborhood are selling for. Local newspapers carry this information too. According to the defendant's expert consultant, that seems to be the point. "They (Ummell) simply didn't do what is expected of a knowledgable, sophisticated buyer."
Should she have used such facilities to make sure she wasn't over-paying? I would have expected as much, but not everyone is that sophisticated. It would be wrong to hold every home buyer to that type of standard.
On the other hand, if you hire a professional to represent you in a transaction, particularly one that involves hundreds of thousands of dollars, wouldn't you expect that professional to have some loyalty to you? I cannot say at this point whether or not the agent actually knew of adverse information. Until then, all we can do is rely on his assessment of the case: "The lady's a nut job. I didn't do anything wrong."
I suspect that the answer is going to lie somewhere between the two extremes on this one. If the agent really was hired as a buyer's representative, and if the agent knew adverse information, he should have spoken up. We'll all find out soon enough.
Source: The New York Times, David Streitfeld (01/22/08)