Lawsuit crazy consumers now suing real estate brokers
Like this case: Marty and Vernon Ummel are suing a real estate agent saying it's his fault that they paid too much for their house. They say Mike Little, an agent with ReMax Associates, hid "comps" from them, the information about the value of other comparable homes selling in a neighborhood.
The Ummels paid $1.2 million for their home in August 2005, and shortly after moving in, they found that a comparable house was available in the neighborhood for $105,000 less. Other houses in the neighborhood were also selling for less, and the Ummels say the agent didn't want to risk them backing out of the deal, so he didn't tell them about these other homes.
I guess the issue here is whether or not the agent should tell a buyer what the neighborhood comps are. My opinion? No. If the buyer asks, I think the agent has a duty to give accurate information. Beyond that, buyer beware.
When I bought my house, I did my own comps. There were a lot of new houses and recent rehabs in my neighborhood. I knew houses were being bought and sold, so I went online and examined property tax records, which also showed how much houses sold for. I wandered through the neighborhood to identify houses that seemed comparable to mine in age and quality. Then I calculated sales price per square foot based upon the property tax data. And what do you know.... I found that the asking price of my home was very competitive and I was getting a good value.
But a broker's job is to sell houses, not talk you out of buying a house. Of course a broker is going to paint a property in the best light possible, emphasizing the features you'll find attractive. The onus in this case was on the buyers to do their homework. No two properties are alike, and no two appraisers have the same opinion on a property. Real estate is subjective, and a buyer really needs to be educated about what they're buying.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.