By now everyone has heard of the case of Vern and Marti Ummel; the Carlsbad California couple who is suing their buyers representative, REMAX agent Michael Little. I read a blog last night that asks the question of whether it will matter if the Ummel's prevail. Is the outcome irrelevant?
Personally I think there is still a lot of information we, as the general public, don't know. After selling their home in San Rafael, the couple began house shopping in Carlsbad in order to be closer to their grown children. The ultimately purchased a home in late May 2005 after firing their original agent and cancelling two other purchase contracts.
The suit alleges that Little defrauded the Ummel's by not telling them about several houses in their neighborhood that sold for less than theirs. They also accuse their agent, who was also their loan officer, of conspiring with the appraiser to inflate the true value of the property.
When asked on the Today show whether they did their due diligence, Marti Ummel replied that she had; she "hired a 26 year veteran of the real estate game with REMAX... We hired our agent because he was a real estate profession. He was expected to do the due diligence." That act in and of itself is not due diligence.
The central claim is that the agent didn't tell the Ummel's about two houses that sold near the one they purchased that sold for $105,000 and $175,000 less than theirs. The home that sold for $175,000 less sold 6 months prior to the Ummel's making their offer. I don't work the San Diego market but I can say that six months in a escalating market can make a world of difference with respect to values.
Although they might have been in the same neighborhood, there are a multitude of reasons why houses sell for different prices; different layouts, overall condition, aesthetics, neighbors, view, sellers motivation, etc. All of these things must be considered in order to truly compare apples to apples. Unfortunately the Ummel's are not in possession of the ancillary information about the other sales; just a couple of flyers showing sold prices. Howeer, that little flyer is only telling one tiny part of the story.
The Ummels also believe the appraisal was inflated based on file notes for the appraiser "Purchase price $1,200,000; Need yesterday -- sorry!" Appraisals are performed to ensure the market value of the property supports the sales price. I actually know the appraiser involved in the case; he and his wife worked in real esate in Fairbanks prior to relocating to California several years ago. I can say he worked very hard to meet value where he could and I've heard comments from people her since the case broke that he might have had less than ethical moments. I'll reserve judgment on that one.
I don't think the Ummel's have a snowballs chance of prevailing. I predict they will be rebuked for not performing their own due diligence with respect to the market and it will ultimately come down to the fact that they signed the purchase agreement and closed on the property of their own volition at a time when the real estate prices were marching skyward. Now that the party is over, they want to be compensated for a decision they really weren't ready to make in the first place (in my opinion).
Of all the off-the-wall comments she made I think the end of the interview was most telling. "... there are other attorneys and real estate agents that think we have a good case. We're trailblazers. I think when all the facts come out we have a very good chance of winning and if not we want to change the industry. We want disclosure..."
Buyers have a responsibility of due diligence to ensure the decisions they make are sound. To me this just screams of buyer’s remorse from a woman who isn't happy with the decision she made. What in the world ever happened to personal accountability? This will indeed be interesting to watch.
Fairbanks Ak Real Estate Broker Jesse Clifton
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JESSE & KATHY - They also were not first time homebuyers that were somehow duped out of their life savings. This was a couple that was spending over $1 million. To be able to afford that home, you should have some financial savvy. I've made bad choices on investments before, and I lost out. One even resulted in the offending parties getting arrested. I blame myself for not doing better due dilligence.