Real Estate Investing

Wow, is it just me or is this kind of a ridiculous lawsuit? You know what might make a great show - Lawsuits of the Rich and Famous. Then again, maybe not. But seriously, you plunk down $1.2 million for a home and a couple years later, you decide to cry about it?

That’s what Vernon and Marty Ummel did. In a lawsuit scheduled for trial in March, the San Diego area couple levels accusations of “negligence” against their real estate agent in a 2005 home purchase. Other houses in the neighborhood have gone for as much as $175,000 less than what the Ummels paid. Many real estate experts are saying, however, that the Ummels should have been more vigilant, though the couple claims that’s what they were paying their real estate agent to do.

According to the news story on NBC’s Today show, part of the lawsuit claims the agent did not comply with the Ummels’ requests to provide a written appraisal until after the papers were signed, but merely told them the house was worth the $1.2 million asking price. If you don’t have a written appraisal, and it’s that important to you, don’t sign the papers. It’s that simple.

Marty Ummel claims that the appraisal was manipulated. Does this smell like someone reacting to the turbulent housing market, who might possibly be upside down in a mortgage? The story included the opinion of MSNBC legal analyst Susan Filan:

“I don’t think it’s a suit that has merit,” Filan said. “I think the standard of proof will be that this agent willfully, deliberately and with malicious intent withheld this information. This information that was allegedly withheld is public information. The bank wouldn’t have given them the mortgage in the amount they got if the appraisal didn’t back the house.”

Time will tell how this will play out. According to the article, legal experts cannot remember a lawsuit of this kind having ever been filed before. At any rate, the defendant’s argument - “Buyer Beware” - seems to be the best lesson from this story. Understand the finer points of what goes into a home price. Be willing to negotiate, do your research of neighboring home prices and demand an appraisal in writing. Look for factors that could help in negotiating the price, like no pool, small lot size, or - in the Ummels’ case - the value of comparable homes located nearby. If saving money is truly important to you, then it’s worth the extra footwork.