The New York Times has an interesting article about a couple in California who are suing their real estate agent (who is conveniently also a mortgage broker) for allegedly artificially inflating the appraisal on their home by $100,000. A few days after moving in to their new home, says the NYT, “they got a flier on their door from another realty agent. It showed a house up the street had just sold for $105,000 less than theirs, even though it was the same size.”
The case is of national interest because it may set legal precedent for thousands and thousands of other home owners who bought at the height of the bubble:
When buyers have sued their agents in the past, the cases focused on problems with the property itself, often alleging failure by the broker to disclose a known hazard or maintenance issue. After reviewing litigation records for the last five years, the National Association of Realtors could find no cases that revolved solely around the question of valuation.
Ms. Ummel’s original suit included the appraiser, who was accused of skewing his report to make the Ummel’s house seem worth the purchase price, and the mortgage broker. Modest settlements have been reached with both.
In a brief phone interview, Mr. Little called the case “ridiculous,” adding: “The lady’s a nut job. I didn’t do anything wrong.”
Mr. Little said that contrary to Ms. Ummel’s claims, the suit was motivated mainly by the declining market. “When people see their home values and assets declining, they always feel there’s someone to blame,” he said. “This is a dangerous time for all of us in the industry.”
Mrs. Ummel may be the first homeowner to sue about this issue, but she’s not the first to suspect shady dealings between appraisers and mortgage brokers. Researching home prices yourself is important, don’t you think?
Feeling Misled on Home Price, Buyers Sue Agent [NYT] (Thanks to everyone who suggested this!)