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What the public will ask is: Did the real estate agent help?

     Drawing a lot of interest in the past several days has been the Carlsbad , Calif. , lawsuit by a home buyer, Marty Ummel, against a real estate agent, Mike Little of RE/MAX.
     At the core of the issue is that Ummel believes she paid $100,000 too much for her $1.2 million home in 2005 and that Little knew the house was overpriced when she bought it, but didn’t tell her.
     Ummel contends Little should have told her that neighboring homes were selling for less. Little contends she should have done her own due diligence.
     As always, there are lots of gray areas to this lawsuit.
     “Overpriced” is a bit vague, especially in the California market in 2005. Most people in the rest of the country about that time thought all California properties were “overpriced” – “outrageous” might be a more appropriate term.
     Also, it doesn’t appear Little was under written contract as a “buyer agent.” It appears he was also acting as the mortgage broker for Ummel. There is a question about when Ummel saw the appraisal on the home.
     All these things make interesting reading for consumers and real estate professionals alike. The case will likely turn on those details.
     The New York Times, whose original story prompted the ensuing debate, suggested this would likely be the first of many home-buyer lawsuits against real estate agents for the same reason.
     Sigh.

     I hate to disagree with the Times, and nobody should try to second-guess the California courts, but Ummel’s case doesn’t look like a winner to me. Too vague. Too many maybes.
     For that same reason, I also think the Times is wrong. I believe a lot of lawyers would look at cases like this and pass. It’s hard to prove a real estate agent can predict market swings. And it’s hard to prove what agents are responsible for knowing values on a neighborhood level.
     Nevertheless, there is a loser here – and it is real estate brokerage in general.
     Like never before, consumers today are asking, “What do I need a real estate agent for?”
     The technology available to agents is available to consumers. The forms, the paperwork – all available to the public. Marketing. The MLS.
     So what do agents bring to the deal? Confidence. Professionalism. Insight. Those are the reasons people hire real estate agents.
     Clearly Ummel believed her agent would protect her (Code of Ethics, Article 1) and at the very least believed she would be under umbrella of the Golden Rule (Code of Ethics, Preamble).
     But more than anything else, real estate consumers hire real estate agents to help them.
     I suspect that by the end of the trial, we’ll see that in this instance, the real estate agent could have helped, but didn’t.
     And regardless of the legal decision from the trial, that’s what the public will remember.

Frank Cook
Publisher

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