There was an interesting article in the New York Times a couple of weeks ago that reported on a lawsuit in the U.S.Â A woman who feels she paid too much for her home is suing her real estate agent, saying it was his fault.
In a nutshell, it appears this lady and her hubby bought their million dollar plus home at the height of the real estate boom in California. After they moved in, they became more aware of property values in their new neighbourhood and subsequently felt that their agent had misrepresented the value of the property.
Since I’m not familiar with all of the details of this particular case, I wouldn’t feel right commenting on it however, the principals of full disclosure, valuation and representation are worth taking a good look at.
In the old days, all agents were required to represent the best interests of the seller in a transaction even if they had never met the seller and were actually working with the buyer. Thankfully, that changed many years ago with the introduction of something called Buyer’s Agency of Buyer Representation. Today, a real estate agency (it’s always the agency rather than the individual) can enter into an agreement with a buyer to represent the buyers best interest and, the vast majority of transactions today are handled this way. (If you are buying or selling, you should read my article Who Is My Agent Working For? on my website to learn more about this.)
But I digress. The real estate salesperson who enters their agency/brokerage into a contract to represent the best interests of a buyer, most certainly has an obligation to disclose everything they know about the property INCLUDING comparable sales and neighbourhood values. Too often, I have seen properties sell for well over what I would perceive to be their market value and, the salespersons excuse is always that market value is whatever a buyer is willing to pay. My response is, No. Market value is what a buyer is willing to pay given that they have ALL of the facts available to them that might influence the amount they are willing to pay.
If you are considering the purchase of real estate, I would suggest that you select your representative carefully. Discuss the issues of representation, disclosure and valuation with them when you talk about the services they will provide. Ask to see a Buyer Agency Agreement and ask to have it explained so you can judge if they understand it. Ask them what experience they have in property valuation and how they will guide you in knowing the value properties which may be of interest to you. When you are ready to make an offer, ask to see a comparative market analysis showing the sale prices both of comparable properties and of others sold in the area in the last six months to a year. Armed with this information, chances are you won’t end up in the same boat as the lady in California.
I’m sometimes accused of being TOO cautious with my buyers about prices. And it’s my buyers doing the complaining! As I always tell them, when I run into you at the grocery store, I want you to be so happy with your home that you hug me rather than glare at me. In 19 years, I don’t recall a single time when one of my clients has overpaid for a house. I’ve never felt like I had to hide in the next aisle and yes, I get hugs in the grocery store.
When it’s time to buy or sell real estate in the Collingwood, Blue Mountain or Georgian Triangle area, contact Marg, an experienced and competent Broker AND Market Value Appraiser who’s ready whenever you are!