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Who Do You Trust?

I got an e-mail from a colleague that launched an interesting discussion.  The gist of it is that his client, a buyer in 2006, wanted to sue the real estate agency/agent that sold him a house because they told him it was a “good investment”.  He was going to start the lawsuit because his client had clear cut damages of over $200,000 (he bought the house for $800,000+ and just dropped his list price to the low $600,000s).  He just wanted my “take” on the problem and the lawsuit.

“Was the agent he’s suing a buyer’s agent?”  I was told “no”.

 

“Did your client pay the agent for financial advice?”  “No.”

 

“Did he sign the document that the agency works for the seller?” “Yes.”

 

“When deposed, will he be able to testify that he did not understand who the agent worked for?” “Probably not.”

 

“Does he come across as really, really naïve or just really, really mad?” “Irate is all.”

 

OK, any judge or jury will logically ask why someone about to spend over $800,000 and take on a pile of long-term debt would take investment advice from someone 1) who works for the person who wants to get the most money out of him (seller), and  2) makes more of a commission the more he pays. 

 

Many buyers hear “it’s a great deal” from an agent and convince themselves they are getting real advice.  But in the cold light of a courtroom, years later, will such foolishness be rewarded?  And if it is, the floodgates will be opened for all the underwater buyers of the past few years to sue the sellers’ agencies, who are after all just doing their duty to the sellers, their real clients.

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