flipper Posted January 22, 2008 Share Posted January 22, 2008 Found this through drudge...http://seattlepi.nwsource.com/business/348...html?source=rssThoughts?flipper Link to comment Share on other sites More sharing options...
HoustonRealtor Posted January 22, 2008 Share Posted January 22, 2008 My first thought was "what next????". But in reality, it doesn't surprise me. People are always looking for someone to blame. As a Realtor, I can only hope that the buyers lose and a precedent is set. The buyers had to be aware of the market conditions where they were buying. And if they weren't, then shame on them, because the rest of the country knew that prices were out of control there.Former clients of mine are in a lawsuit over a transaction that fell apart. They have spent many times more in legal fees than what was at stake in the first place. Greed will make people do crazy things. Link to comment Share on other sites More sharing options...
RedScare Posted January 22, 2008 Share Posted January 22, 2008 Hmmm....this website suggests that Realtors are professionals who keep you from making mistakes such as paying too much for a home.http://www.realtor.com/basics/allabout/rea...asp?poe=realtorSeems to me, that if this is not the case, then websites like this are not being honest in their claims.I wonder who is correct...the defendant Realtor or the website? Link to comment Share on other sites More sharing options...
JJVilla Posted January 22, 2008 Share Posted January 22, 2008 An important point here is captured by the following quote:"Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission."Normally you don't sue when it happens the other way (your house appreciates) because I doubt someone (buyer's Realtor) would hide the information if they were selling for more. The following is a good counter-point:"He will argue that Marty Ummel, who brought the case with her husband, Vernon, is trying to shift the blame for the couple's own failures of research and due diligence."Overall, I would say that it is your duty to do own research when investing or buying real estate. Cases where fraud is committed that your research can't uncover would justify a lawsuit and other action. Link to comment Share on other sites More sharing options...
musicman Posted January 22, 2008 Share Posted January 22, 2008 Thoughts?that's why many call them Musicmen. Link to comment Share on other sites More sharing options...
RedScare Posted January 22, 2008 Share Posted January 22, 2008 The shifting the blame argument for lack of due diligence, and sophistication brings up a HUGE issue. Just EXACTLY what is a Realtor doing to earn a buyer's fee, if they are not doing due diligence and bringing sophistication to the buyer? The entire defense here is that, "I am only here for the fee. It is up to the buyer to figure out if it's a good deal."Unbelievable. Link to comment Share on other sites More sharing options...
HoustonRealtor Posted January 22, 2008 Share Posted January 22, 2008 Without all of the facts, none of us can (or should) be the jury. I agree that it is important to provide information to both buyers and sellers in order to make them more knowledgeable. My initial concern was that the buyer was taking the easy way out, much the same way people have tried to sue McDonald's because they are fat. This country has entirely too many frivolous lawsuits that tie up the justice system.If the agent was only looking out for his commission, then he deserves to be punished. He has been a Realtor for quite some time according to the article (26 years according to his own website). In that time, he has probably learned a thing or two about real estate. I would like to give him the benefit of the doubt, and our justice system is required to do the same.Once provided with information about comparable sales in the area, it is the buyer's job to determine how much they will offer for a house. In this case, they made the offer and were apparently comfortable with it at the time. They even closed the deal. Real estate is not a "sure thing". I think too many people make purchases thinking that they are going to make a fortune eventually. When it doesn't happen, they are obviously disappointed. And sometimes when people are disappointed, they look for someone to blame.When the data is gathered and it can be determined when prices started falling, we will have a better idea of who, if anyone, is at fault. This may merely be a case of the buyers being in the market at the wrong time. But if there was a definite and obvious trend that the Realtor should have reasonably known about, then he may be in for a legitimate battle.I guess I will sum this up with what I should have said the first time around. I hope that whichever party should prevail ends up doing so. I don't want the Realtor to win only because of the fact that he is a fellow Realtor, but I also don't want the buyers to win merely because they bought a house that has depreciated rather than appreciated. Link to comment Share on other sites More sharing options...
crunchtastic Posted January 22, 2008 Share Posted January 22, 2008 Does anyone know how the state of California regulates buyers' agents? I thought it was a state-by-state thing and in many places, unlike Texas, the buyer agent operates under a different agreement-- because their commission is paid by the buyer. Unlike here where a buyer's agent is paid out of the sellers fees. Link to comment Share on other sites More sharing options...
RedScare Posted January 22, 2008 Share Posted January 22, 2008 Well, I must say, a Realtor doesn't seem to offer much for $30,000, under your explanation of things.I have wondered for years how a buyer's agent deals with the inherent conflict between the agent's fee and the agent's stated duty to help the buyer secure the best deal. This lawsuit, and your explanation make me feel that the answer would be, "to the agent's benefit". If a buyer will get no more than what this defendant and you are saying, it would be my advice to anyone purchasing a house to skip an agent altogether and take your chances, because it doesn't sound like buyer's agents are doing anything. Link to comment Share on other sites More sharing options...
BryanS Posted January 22, 2008 Share Posted January 22, 2008 Absent any sense between the ear's of this buyer - this deal should have been stopped at the loan officer's desk.Does it sound like a good idea to give someone, who makes $75,000/year, a loan on a $500,000 house? (6% on 500K=30K in commision, per the article). Under "traditional" lending rules, which have been thrown out the window over the past 5 years (and got us into all this mess), this person should not be allowed to borrow any more than 3x their salary, or $225,000 MAX. But what about her dream of home ownership, you ask? Too bad. You can't afford it. Move somewhere else or RENT in that type of market. Even on a 40-year interest only loan, the payments would still be outrageous. I can't believe that people do not realize, before they even think about buying: "...a half a million seems kinda pricey... ...I don't think I can afford this... maybe I should do something else..." Otherwise, your dream of ownership will be a nightmare - and you really have no one to blame but yourself. Link to comment Share on other sites More sharing options...
sevfiv Posted January 22, 2008 Share Posted January 22, 2008 ^Well, to be fair, her husband Vern (who may have been on the mortgage) is a VP at Dominican Universityhttp://www.dominican.edu/about/leadership.1.html Link to comment Share on other sites More sharing options...
HoustonRealtor Posted January 22, 2008 Share Posted January 22, 2008 Well, I must say, a Realtor doesn't seem to offer much for $30,000, under your explanation of things.I have wondered for years how a buyer's agent deals with the inherent conflict between the agent's fee and the agent's stated duty to help the buyer secure the best deal. This lawsuit, and your explanation make me feel that the answer would be, "to the agent's benefit". If a buyer will get no more than what this defendant and you are saying, it would be my advice to anyone purchasing a house to skip an agent altogether and take your chances, because it doesn't sound like buyer's agents are doing anything.Please elaborate, because you lost me. I said that agents must provide information to both buyers and sellers (depending on who they represent) in order to make them more knowledgable. In the end, it is the buyer and seller that come to terms and complete the transaction. The agents involved do not have control over either of the parties...we represent them, but we do not complete the transaction for them. However, I did not say, or imply, that the agent has no other duties, responsibilities or involvement in the transaction if that is what you are getting at.Personally, I am very ethical, and have talked myself out of many commissions because I didn't think that my client was looking at the big picture. Some may say that it's bad business, but I would argue that when my clients are ready, they will come back to me because I was open and honest in the first place. I tell them my opinion, and in many cases they agree. In fact, I have a number of former "buyers" that never bought anything at all because of information that I gave them. Some were planning to relocate in a couple of years and were concerned about resale. I don't tell them what they want to hear just for the sake of the sale. If I don't feel that there is much room for appreciation, I let them know that. The last thing I want is to get their listing in a couple of years and have them bringing money to the table becuase their home didn't even appreciate enough to cover their closing costs. Other buyers have been looking at investment property that just didn't make sense unless they were only looking for a tax write-off. I have also passed on taking listings where the seller had no chance of selling their property for what they wanted. I would rather not take the listing than to constantly hit them up for a price reduction because I lied about the value up front in order to secure the listing. I know that there are less ethical agents that would have done what it took to get the listing, just like there are crooked people in every industry, but I don't work that way.As for the argument about being a buyers agent and not working to get the buyer the best deal when my commission is proportionally at stake, that has never been an issue for me. However, I know that isn't the case for everyone...and it's unfortunate. My goal is always to get my buyer the best deal. I will show them the comps and coach them on how to proceed. A recent client of mine purchased a home for *significantly* less than comparable sales in the neighborhood. I busted my butt putting the deal together with an agent and seller/investor that knew the area very well. On top of getting the house for less than my buyer ever expected, I also gave her the bonus that the seller was offering to the selling agent (which was me in this case). My buyer sent a glowing email about the service that I provided to everyone that she knew. I have since seen the email myself. The satisfaction from making someone that happy is much more than I would have received by getting her to buy the house at close to list price (which was a very fair number) and keeping the bonus for myself. Do I hope to get repeat business and referrals from her? Of course I do. I am building a business just like anyone else in any other industry. But I can honestly say that if I never hear from her again, I will always be happy about the deal that I helped her get. Not every agent is a crook. Link to comment Share on other sites More sharing options...
HoustonRealtor Posted January 22, 2008 Share Posted January 22, 2008 Absent any sense between the ear's of this buyer - this deal should have been stopped at the loan officer's desk.Does it sound like a good idea to give someone, who makes $75,000/year, a loan on a $500,000 house? (6% on 500K=30K in commision, per the article).I've been going with the assumption that the house was $1,000,000. The "typical" 6% commission is split between the listing agent and the selling agent. I have assumed he only represented the buyers, and $30,000 is 3% of $1,000,000. Of course, it doesn't really matter what the price was in this case. I just wanted to present another view. Link to comment Share on other sites More sharing options...
BryanS Posted January 23, 2008 Share Posted January 23, 2008 I've been going with the assumption that the house was $1,000,000. The "typical" 6% commission is split between the listing agent and the selling agent. I have assumed he only represented the buyers, and $30,000 is 3% of $1,000,000. Of course, it doesn't really matter what the price was in this case. I just wanted to present another view.Even worse. How did we ever let "middle class" people buy such outrageously expensive homes? California is screwed (in fact, we may all be screwed, again, as CA takes down the whole country). What is happening/happened to the subprime buyers who bought 150K houses they could not afford is going to happen to prime buyers in states like CA when they get crushed by their 500K+ mortgages. And guess who owns all those mortgages? Countrywide, Bank of America, Citi, and all the same players who got burned with the subprime mess. Get ready for Round 2 folks.California foreclosures hit 20-year high in 4Qhttp://www.sfgate.com/cgi-bin/article.cgi?...p;feed=rss.news Link to comment Share on other sites More sharing options...
millennica Posted January 23, 2008 Share Posted January 23, 2008 Does anyone know how the state of California regulates buyers' agents? I thought it was a state-by-state thing and in many places, unlike Texas, the buyer agent operates under a different agreement-- because their commission is paid by the buyer. Unlike here where a buyer's agent is paid out of the sellers fees.The California Association of Realtors has different kinds of buyer broker contracts. One The Exclusive Authorization to Acquire Real Property Link to comment Share on other sites More sharing options...
millennica Posted January 23, 2008 Share Posted January 23, 2008 Absent any sense between the ear's of this buyer - this deal should have been stopped at the loan officer's desk.Does it sound like a good idea to give someone, who makes $75,000/year, a loan on a $500,000 house? (6% on 500K=30K in commision, per the article). Under "traditional" lending rules, which have been thrown out the window over the past 5 years (and got us into all this mess), this person should not be allowed to borrow any more than 3x their salary, or $225,000 MAX. But what about her dream of home ownership, you ask? Too bad. You can't afford it. Move somewhere else or RENT in that type of market. Even on a 40-year interest only loan, the payments would still be outrageous. I can't believe that people do not realize, before they even think about buying: "...a half a million seems kinda pricey... ...I don't think I can afford this... maybe I should do something else..." Otherwise, your dream of ownership will be a nightmare - and you really have no one to blame but yourself.It definitely isn't a good idea to loan someone making 75,000.00 a year a loan on a 500,000, but that wasn't the situation in this case. Seventy-five thousand dollars only represents one spouse's salary. Ms. Ummel made 75,000.00, but the NYTimes article indicates that her spouse was also employed. If he was making a salary comparable to hers, then their combined salaries would have been 150,000.00 not 75,000.00. The price of the house was 1.2 million dollars, not 500,000.00. Although the NY Times article doesn't mention whether this couple sold a house before buying this one, before moving to Carlsbad which is in San Diego County, the Ummels previously lived in the SF Bay Area. It is possible that they sold a house in the SF Bay Area. If so, this might have given them a substantial down payment toward the house so the loan amount may not have been risky and the mortgage payments may not have been outrageous. http://www.nytimes.com/2008/01/22/business...&ei=5087%0A Link to comment Share on other sites More sharing options...
BryanS Posted January 23, 2008 Share Posted January 23, 2008 It definitely isn't a good idea to loan someone making 75,000.00 a year a loan on a 500,000, but that wasn't the situation in this case. Seventy-five thousand dollars only represents one spouse's salary. Ms. Ummel made 75,000.00, but the NYTimes article indicates that her spouse was also employed. If he was making a salary comparable to hers, then their combined salaries would have been 150,000.00 not 75,000.00. The price of the house was 1.2 million dollars, not 500,000.00. Although the NY Times article doesn't mention whether this couple sold a house before buying this one, before moving to Carlsbad which is in San Diego County, the Ummels previously lived in the SF Bay Area. It is possible that they sold a house in the SF Bay Area. If so, this might have given them a substantial down payment toward the house so the loan amount may not have been risky and the mortgage payments may not have been outrageous. http://www.nytimes.com/2008/01/22/business...&ei=5087%0AAnything could be "possible" in this case. It's possible they were over extended on their home in SF and had no equity for a down payment. It's possible that Ms. Ummel's salary was much less than 75K (the article said that her legal bills of 75K had surpassed her salary - so she could be making even less). It's possible these people truly got themselves into a mess and were looking for an easy way out. My main point is that we haven't been very smart consumers. And looking at your NYT link... these people were truly idiots:"Mr. Little also worked as a mortgage broker. The Ummels say he encouraged them to get their loan through him. Mr. Little ordered an appraisal of the house but did not respond to the couple Link to comment Share on other sites More sharing options...
houstonmacbro Posted January 23, 2008 Share Posted January 23, 2008 Even worse. How did we ever let "middle class" people buy such outrageously expensive homes? California is screwed (in fact, we may all be screwed, again, as CA takes down the whole country). What is happening/happened to the subprime buyers who bought 150K houses they could not afford is going to happen to prime buyers in states like CA when they get crushed by their 500K+ mortgages. And guess who owns all those mortgages? Countrywide, Bank of America, Citi, and all the same players who got burned with the subprime mess. Get ready for Round 2 folks.California foreclosures hit 20-year high in 4Qhttp://www.sfgate.com/cgi-bin/article.cgi?...p;feed=rss.newsI've heard that in many places with high housing costs they actually have 50-60 year mortgages. Link to comment Share on other sites More sharing options...
BryanS Posted January 24, 2008 Share Posted January 24, 2008 I've heard that in many places with high housing costs they actually have 50-60 year mortgages.Even beyond that. In Japan (at the height of their real estate bubble), back when a square foot of Japanese soil was valued at the equivalent of the entire state of CA, 100-year mortgages were not uncommon. But we can do even better: The inter-generational mortgage... You pay interest only on the mortgage for your entire life. When you die, the property - and principal payments - must be made by those who you leave your property to. At that point, whoever gets the property can sell it to finally retire the loan. What a deal! Mortgage lenders that get a never ending supply of interest payments! for decades and decades and decades...http://www.moneyweek.com/file/17935/a-mort...and-beyond.html"Last week, the Kent Reliance Building Society launched the first Link to comment Share on other sites More sharing options...
brerrabbit Posted January 24, 2008 Share Posted January 24, 2008 I spent a very short time in real estate and can certainly understand the difficulties of the job, but at the same time as a consumer who no longer works in real estate has the same complaints as others about the profession. I think there is value added by a good RE agent but at the same time it seems they do very little to make their money. The measure for a good RE agent is how many houses they move and the industry seems to have moved somewhat to team concepts in order to generate more transactions to make more money. I have no problem with this. However in the articles I have read about the California case I think the agent did a huge diservice to realators everywhere when he said, they weren't sophisticated buyers and didn't do their due diligence. Well excuse me, what were you getting paid $30,000 for? My experience quite frankly in RE was this, you spend most of your time marketing yourself and convincing people to list with you. This leads you to not spending enough time actually working for your clients. I worked with a lady who started around the same time I did and had deep roots in the area I worked. She grew up there and knew half the people in town. She marketed herself extremely well and knew a tremendous amount of families in the just entering empty nest stage who were looking to move down from the family home to a smaller home. She had tons of listings and was really put on the map when she sold a $695,000 listing on Taylor Lake after it had gone unsold for over a year with another agent. The sale was "luck" because the house was an odity with four floors and a regulation craps table on the first floor. It was on the water and strictly a party house that was waiting for that one "right buyer". She did nothing to market it really and the owner just happened to tell a party friend he was selling and the guys company wound up buying it. The point of the story is this, the lady was dumb as a rock! She said and did everything you are taught as a realator not to do. She guareenteed people she would sell theri house within a certain time, she made promises she could not keep. By luck or fate or karma none of thes things ever came back to bite her. Now 8 years later she has her own Remax office and I talk to her occasionally and guess what? She is still dumb as a rock! She manages to succeed in spite of herself. I would never consider doing any transactions with her because it would inverably lead to disaster.The point of my rant is this, a good RE agent can add value to a transaction but from my personal experience a lot of RE agents add virtually no value. Many people go to them because they hold a key to the most important asset there is when it comes to selling a house. That being the MLS. Houses in suburbia that list for about $250,000 and less don't take a whole lot of selling. They are what they are, you put a sign in the yard and a listing online and go on your way. If you can get people to list in this market, you will make your money. Agents who work older neighborhoods with widely varing prices and less cookie cutter house seem to be the ones that earn their money. They have to know the market and work hard and generally don't make nearly as much as the agents in suburbia. I salute them and would never consider buying or selling in those areas without them. The soccer moms doing RE part time in suburbia I could live without. Link to comment Share on other sites More sharing options...
mumbles Posted January 25, 2008 Share Posted January 25, 2008 Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.If the agent lied, then I think its great they are suing. Might make other agents pay attention and not tell so many lies. Most of the agents I have met work for themselves, not for the buyer. The sooner they sell a house and the higher the price, the more money they make. Link to comment Share on other sites More sharing options...
rapturematt Posted January 25, 2008 Share Posted January 25, 2008 Unfortunately, if the claimant wins they will just draw from the California Association of Realtors Trust. It will probably never affect the realtor. Link to comment Share on other sites More sharing options...
millennica Posted January 25, 2008 Share Posted January 25, 2008 Anything could be "possible" in this case. It's possible they were over extended on their home in SF and had no equity for a down payment. It's possible that Ms. Ummel's salary was much less than 75K (the article said that her legal bills of 75K had surpassed her salary - so she could be making even less). It's possible these people truly got themselves into a mess and were looking for an easy way out. My main point is that we haven't been very smart consumers. And looking at your NYT link... these people were truly idiots:"Mr. Little also worked as a mortgage broker. The Ummels say he encouraged them to get their loan through him. Mr. Little ordered an appraisal of the house but did not respond to the couple Link to comment Share on other sites More sharing options...
rapturematt Posted January 25, 2008 Share Posted January 25, 2008 The point of my rant is this, a good RE agent can add value to a transaction but from my personal experience a lot of RE agents add virtually no value. Many people go to them because they hold a key to the most important asset there is when it comes to selling a house. That being the MLS. Houses in suburbia that list for about $250,000 and less don't take a whole lot of selling. They are what they are, you put a sign in the yard and a listing online and go on your way. If you can get people to list in this market, you will make your money. Agents who work older neighborhoods with widely varing prices and less cookie cutter house seem to be the ones that earn their money. They have to know the market and work hard and generally don't make nearly as much as the agents in suburbia. I salute them and would never consider buying or selling in those areas without them. The soccer moms doing RE part time in suburbia I could live without.I agree with you 100%. A RE Agent is not what it used to be. You used to be able to depend on them to do all the research, know their farm area, and not be afraid to tell you something just because they don't want to lose the sale or get in trouble. It is called education and unfortunately I think most RE agents don't have enough of it now. I really think that you should have to get a bachelors before you step into that field instead of spending a hard week in class to get your license. I used a RE agent recently who did not know anything. I practically had to teach them on how to purchase the home I wanted. The only reason that I really needed them was to get access to the MLS database. It is nearly worth it for me to go spend the week in class and get my license myself instead of depending on a green RE agent and belive me there are more green ones out there than experienced ones. It is a shame that people feel they have to sue their RE agent to get results, but if they RE licesing board would have been more rigid on their acceptance of new agents, then they maybe would not be in the situation of being sued in the first place. Link to comment Share on other sites More sharing options...
HoustonRealtor Posted January 25, 2008 Share Posted January 25, 2008 This couple was on the Today show this morning. I have not seen it yet, but a friend caught it on TV and recorded it for me.I was told that the MSNBC legal analyst feels that the suit has no merit and that they would have to prove that the Realtor maliciously and willfully made them overpay for the house. She feels that it is just a case of buyer's remorse. It is just one person's opinion, but I thought that I would throw it out there for you.Each show is posted on their website and the interview was on at about 7:30, so anyone can catch it later on when it's posted. Update - It's online now, here is the link: http://www.msnbc.msn.com/id/22840771/ Link to comment Share on other sites More sharing options...
mumbles Posted January 31, 2008 Share Posted January 31, 2008 She says the point of the law suit is to make agents provide full disclosure. First time home buyers don't know what questions to ask, many agents aren't going to volunteer info, they just want to sell the house for the most they can get. I'm glad they filed the suit, if only to bring attention to others that they shouldn't trust their agent. Link to comment Share on other sites More sharing options...
jgriff Posted January 31, 2008 Share Posted January 31, 2008 The only value my RE agent added was the fact that she had the keys to get into the houses I wanted to see. I found all the houses I wanted to look at for her on the internet and she took me to see them. I don't think that is worth a 6% comission. If there was someone out there with access to the key boxes that would charge a flat fee to drive me around and look at houses I'd use them instead. Hopefully this whole profession will go down the tubes soon due to internet listings and the housing crash, they're just a 6% useless drag on the entire housing sector. Link to comment Share on other sites More sharing options...
flipper Posted February 6, 2008 Author Share Posted February 6, 2008 I thought this was appropriate for this thread:SLASH - Burned?flipper Link to comment Share on other sites More sharing options...
jscarbor Posted March 4, 2008 Share Posted March 4, 2008 You might be the perfect fit for www.2percent2buyer.com?The only value my RE agent added was the fact that she had the keys to get into the houses I wanted to see. I found all the houses I wanted to look at for her on the internet and she took me to see them. I don't think that is worth a 6% comission. If there was someone out there with access to the key boxes that would charge a flat fee to drive me around and look at houses I'd use them instead. Hopefully this whole profession will go down the tubes soon due to internet listings and the housing crash, they're just a 6% useless drag on the entire housing sector. Link to comment Share on other sites More sharing options...
mpbro Posted March 4, 2008 Share Posted March 4, 2008 Found this through drudge...http://seattlepi.nwsource.com/business/348...html?source=rssThoughts?flipperOr just let Bernanke and company reduce the principal on your loan! Link to comment Share on other sites More sharing options...
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