Home : Can You Sue Your Agent if You Paid Too Much?

Can You Sue Your Agent if You Paid Too Much?

Posted by Michael Sexton on 1/22/2008 at 8:38 AM
Posted in Real Estate

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A front-page article in today's New York Times reports that a home buyer in California has filed a suit in North County Superior Court, claiming damages because she paid too much for her house. The buyer claims that the broker, in an effort to protect a commission, concealed the fact that comparable homes in the area were selling for less than the price that the buyer had agreed to pay.

It is a bombshell, and a case that is worth watching. Frankly, I doubt that the court will award damages to the buyer. After all, isn't it the buyer's responsibility to do a market comparison and be sure that he or she is not overpaying? How can a buyer claim that that due diligence is the responsibility of the broker who is, at best, only an advisor in any real estate transaction?

The article predicts that the suit is likely to be "the first of many" times when buyers who bought at the peak of the market attempt to claim damages from real estae agents. If the plaintiff wins, the result is likely to be "open season" on real estate agents across the country.

What do you think? Should buyers be able to sue their brokers because they paid too much? Can they really blame anyone other than themselves?

It is a hot topic - and the results will be worth following in the months ahead.

Michael Sexton is President of Trump University.

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20 Comments

Posted by Fine International Homes on 01/22/2008 10:34 AM

I guess, being a realtor, I will have to raise my commission to include the higher liability insurance…just like the doctors have to do.
I think it’s ridiculous and that people have to learn to take their responsibility. In the end it’s the buyer who agrees to pay the price of a home and sometimes they want a home so badly that they overpay, no matter what we say. We work in the best interest of our client but we don’t have control over their wallet.
My advice, make sure that in the "Buyer representation agreement" it states that the broker is not responsible or liable for the price a client has paid for a property, once the property sale has closed

Posted by member1509747 on 01/22/2008 11:06 AM

This is interesting. Maybe realtors need to buy malpractice insurance, like lawyers do. If I got bad advice from my lawyer, I could sue him. The difference here is that a price for a home these days is a moving target [moving down mostly], and legal advice is not. Having said that, a buyer's realtor should protect the buyer's interest, not their own. The realtors that make it in this business are the ones that think of thier client's needs first. I know it is old fashioned, but I am wealthy [and more importantly, HAPPY] because I have employed that approach to my business. Caveat emptor.

Posted by William Yang on 01/22/2008 11:18 AM

You're right, this is interesting, if the by\uyer won, so there'll be no more up trends in the real estate market.

Posted by lightwayvez on 01/22/2008 1:07 PM

People are so pedestrian. The premise that it is the consumer's responsibility to educate themselves in everything they do and say in life is crazy making. That is why we hire professionals to do the job. That is their area of work day in and day out, their area of license and experience. When a consumer has to be educated par to the business agent in purchasing a home, a house, a place to live then the point of using an agent in the first place quits being a need and the consumer can then represent themselves rather than turning to an agent. This elimenates the middle man at best. Does the agent not value the meat and potatoes of his job and all that it can and will offer in one lifetime. Or is it an added expense the seller rather for go ?

To many disclaimers and not enough geniune care for the community at large.

Posted by lightwayvez on 01/22/2008 1:15 PM

Second comes to mind the leaky condo syndrome which plagued residence in Vancouver. Was it worth it to leave that many people asking for emergency help because everyone else had the right to wash their hands clean of the deal ?

It is about what the company costs the taxpayers and the community. Bad business hurt Vancouver's community for quite sometime with regard to leaky condo's and I don't want to know what that cost our government in relief funds.

What the large company does not want to bother with some how always falls on the government's doorsteps and they end up having to clean the mess. Oddly this hurts the guy at the top who washed his hands clean of it in the first place because now there is a scare to his industry that compromises his client base.

Posted by BARRY LENSON, TRUMP U's EXECUTIVE EDITOR

on 01/22/2008 3:15 PM

All your comments are bang-on and very interesting. If I paid too much for a house (or a car, or a boat), it would never occur to me to sue the salesman. Perhaps our lawsuit-happy world promotes the idea that we never need to take responsibility for things we do wrong. Point the finger and hope to collect a check!

Posted by T.W. Nicholls on 01/22/2008 5:47 PM

While I personally like to do my own research and would never rely solely on any salesperson's advice, I can see why this lawsuit happened. If the real estate agent had been working for the seller, then I'd say there's no basis for a suit. But, since the agent was a BUYER'S agent, then I think it's only reasonable that he should be held responsible because he didn't disclose all available information. Yes, the buyer should have checked things out on her own, but the agent was supposed to represent his client, not protect his commission. He would have gotten his commission from whatever house he sold her so, as far as I'm concerned, he was deceptive in his practices and didn't represent his client honestly. Remember, he was the BUYER'S agent, not the seller's as is usually the case. This woman relied on him to be honest with her and do the research for her, not cover up facts to protect his commission.

Posted by MrNeville on 01/22/2008 6:08 PM

The agent is more than a salesperson though. They are to an extent professionals and where there were fiduciary duties owed and those duties weren't fulfilled , the plaintiff could have a case. Who knows what the actual loss was, for that I expect they'll have competing experts look at what really was going on in the market. In the end real estate agents are professionals and licenced because they do provide some professional services. Their diligence and care protects the integrity of the entire real estate market, something that is a bit of a problem right now.

Posted by member1716119 on 01/22/2008 7:28 PM

As a realtor also, I take the time to educate buyers and sellers. The value of homes are going down currently and are going to go up eventually. If the buyer wins, which is unlikely, it would be just as ridiculous for the realtor to sue for more money when the value of the home increases. With anything in life comes risk. Walking out your front door is a risk, as is driving and flying - accept responsibility. Take time and listen to your realtor - keep your head in the game and your emotions out of it - this isn't preschool - it's life and money. McDonald's shouldn't have to put "Caution: Coffee is Hot" on Coffee - hello? Did you really want cold coffee? With any profession their is questionable character - all realtors are not crooks. Just take some responsibility for your life and you will not have to play the victim. Karey Brown - RE/MAX, Associates of Topeka, LLC.

Posted by member1707382 on 01/22/2008 10:31 PM

I would hazard a guess that in any legal case where a judge or jury finds a real estate agent responsible for this kind of thing you will probably find a crook at the bottom of it. Every real estate agent I've ever worked with holds my interests in highest regard and ALWAYS shows me the comparables and advises me about the merits of any offer I make. That's what a real estate agent is supposed to do. When they take steps to conceal information and there is evidence that misstatements of fact were made, you can be sure that a judge will rule in favor of the consumer on the basis of fraud, constructive or actual. My solution: Don't hire crooks to represent you.

Posted by member1195681 on 01/22/2008 10:49 PM

It depends on the quality in which the broker assisted the buyer: transactional broker or a single agent. As a single agent for the buyer the broker would have to obtain the most favorable price and terms for the buyer. As a transactional broker, however, he didn't need to do it.

The broker is screwed if he was a single agent in this case and safe if he was a transactional broker.

Posted by lightwayvez on 01/23/2008 2:31 PM

This uneducated consumer we shall assume is uneducated to have purchased a home at an inflated price in the first place.....

who taught the consumer to shop in the first place but the market itself ?

or is the consumer simply a democratic voice inspecting the market ethics of a said business transaction.

round about it will always come back to the community's values.

Birds of a feather ... ?

Posted by lightwayvez on 01/23/2008 2:53 PM

If the broker is on the hook what of the owner selling the property ?

At what level does an audit approve the sanity of any given transaction.

If the consumer can sue the agent then the agent should then have the means to sue the previous owner ?

Or did he not initially approve the legitimacy of the transaction in the first place.

Whether it be numbers or community substance each player made an academic decision that will always at some level be evaluated for its outcome and impact to the group as a whole which in this case deems to be the homes of lesser value in the surrounding area.

Barry states there will always be some cheap suit looking to cut a cheque. I go deeper and see the value of this squeaky wheel. The potential to flip those cheaper homes to a greater value sits in the balance.

Posted by Business 2000 Foundation.com on 01/23/2008 4:04 PM

That is interesting.

We would say yes to sue in a fraud or scam if the agent does withold or conceal true documents. That directly hindors a deal.

Such as a broker must disclose in selling of property of damage goods on that property, in turn, effects the sale value and could hindor the parties. Brokers are not imune to laws, but the purchaser must also do the due-diligence and take the fall...if they fail.

Posted by member1714852 on 01/24/2008 4:26 PM

Brokers should have a statement, inside of the documents that buyers sign, that tells them that it is their ultimate responsibility to independently analyze the market to insure that the buyer is satisfied with the deal. Brokers shoudl be able to make a deal happen that both maximizes his/her commission while simutaneously satisfying the customer. I hope this case is dismissed. With that said, honesty is the best policy and unhappy customers will spread the word like a wild fire. Broker and buyer beware.

Posted by member1704944 on 01/24/2008 8:35 PM

I recently attended one of Trump U. semminars.
In it one of the speakers said (and I paraphrase)
This is the land of the Free, the Brave and the Sewers (the spelling is meant that way).

Although the speaker was from Mississippi, that was not the reason for the spelling. He meant that people are willing to sue others at the drop of a hat and he considers them bottom feders (hence the spelling).

The bottom line is that there are plenty of people out there who choose to blame others for their failures or their own faults. This has sometimes come to the point that children and parents are sometimes going to court against eachother for something that should have been handled at home accross the table.

To take responsibility for your own actions is not only right it takes courage, especially when your actions where wrong. The sad part of this is that the new generation of children is learning to pass on the blame to others and get away with ridiculous acts.

Posted by member1717596 on 01/24/2008 10:16 PM

Look here - caveat emptor: let the buyer beware. It's the buyer's responsibility to do his (or her) homework, and no one else's.

Posted by member1711951 on 01/25/2008 7:57 AM

The article leaves out many important issues.
1.Was the broker a BUYERS agent?
If yes,Broker has a greater responsibility to their client. therefore a greater liability.
If,no,Broker should have let the buyer know that they are either working to put a transaction together or they work for the seller.
2.Was there an appraisal?
if yes,Broker has legal basis for the price opinon.
If no,WHY NOT?
3.In a sellers market ,doesn't the next sales price automatically EXCEED the comparables?
If not how is it a rising market?

EVERYONE should have the basic right to sue.Of course you have to find an attorney
willing to represent you.How do you do that if your case does not have any merit?

Real estate agents MUST be fair and honest.
If not,they should be held accountable.

Only when all the details are known ,we will get an answer.

Real Estate Broker/Owner
BASILOVECCHIO

Posted by Rachael Sutton #1253595 on 12/16/2008 10:11 AM

I'm not an expert in real estate or California law, but it seems if anyone in business deliberately misleads a buyer with profit as a motivator, there should be some recourse available. At the same time, the buyer should either do the research or have a qualified expert that will do it. Also, in this particular case, maybe the buyer down the street was a better negotiator or the seller was more desparate to sell.

In Michigan, I believe two realtors are involved in the sale and purchase. One represents the buyer and one the seller. If the person representing me did not look out for my best interests, I would want to take action. But how much effort does it take to go on-line or pick up local flyers to see what the asking prices are in the area?

Posted by member11032368 on 11/01/2009 11:50 PM

So..... let's see people have problem with a realtor being sued because they represent a buyer and then fail to assist with the purchase of the property. I was wondering when consumers would wake up and realize that they have been duped. As a property owner I did my own property analysis based on purchase prices for the entire neighborhood. Most people do not know that they have access to this information online - most of us had to go to the local courthouses. Sure I think they should be sued - what the hell do they do - most won't even drive their cars to show the houses because it costs too much for gas! Can't wait until these idiots really have to get a job and really work for a living. Oh and before all of you get soo...... upset - when our house was for sale earlier this year every damn female realtor was calling from a mall.

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