http://www.msnbc.msn.com/id/22840771/

Of course everything would be different if the housing market had not taken a dump in San Diego. Maybe someone needs to introduce this lady to the term "caveat emptor."

Do I get to sue Charles Schwab for the tens of thousands I lost back in 2000?

If charles Schwab gave you false and misleading advice, you might have a case. Except most brokers make you sign a arbitration clause, before they will take you as a client.

IMHO, this is a case somewhat different than what Schwab does.

In the case of a Realtor, they are supposed to be working in your specific interests. Part of their value lies in the price paid for the home. It is expected that agent works hard to buy at the lowest price possible.

Failure to act in good faith as a negotiator is an interesting legal question. There is a code of ethics for Realtors that may well have been violated here.

I've had bad agents before. Had to file ethics complaints. Never once thought of litigation, simply because I didn't enter into the deal, once all was discovered.

Had I actually entered into a binding deal, and found that out, I might consider litigation. It depends on a lot.

I also suspect a whole lot of people don't know when / if they are getting hosed. The amounts are usually smaller than this too. Getting hosed for 10K sucks, but it's not worth a court battle for most people.

This amount is!

Charles Schwab helps you to manage risk. There is some error in that to be expected.

A real estate agent, is really similar to an attorney in that they act on your behalf, and in your specific interests.

Risk isn't the factor here, it's potential failure to perform, or worse.

What was the intent?

With a sum that large, were the agents colluding, was commission a driving factor? That's all bad intent, contrary to the code of ethics they are supposed to follow, and that are a part of the implied value justification for their services.

Now, maybe it's incompetence. She didn't research, researched poorly, simply failed to negotiate well enough. Intent was ethical, but performance just sucked.

Lots of ways that could go, and we don't know enough from the story yet to really get into it.

eg: Say you were buying a car, and I offered to deal with them, keeping some of the savings for my self as compensation for services rendered.

If I end up helping you buy that car at a premium, I get more, but that's unethical.

Now with me being a lay person, you get what you get. However, if I had specific training, wouldn't that be a basis for some litigation?

Most realtors work for the seller, not the buyer, but it is becoming more common when purchasing homes for the buyer also to have an agent, to represent their interests.

As long as the realtor stuck to facts, or her opinion, and let it be known it was just her opinion, the buyer probably has no recourse.

Actually, you can get both --and should. Nobody should enter into a real estate contract of any kind without representation. That can be an attorney, or Realtor.

And Nwokie, it's those facts that very well might be in question here. That's a pretty big over buy. Kind of hard to miss that, had the agent acted with dilligence. Maybe that agent didn't, and that's a problem ethically.

Maybe not a criminal thing, but I'll bet there is a civil case there. One cannot just say, "I would make this transaction" without some justification for that opinion / recommendation.

What is that justification and is it rational?

IMHO, to me, pretty damn big questions.

It will be interesting to see if the listing was in the agent's office, either listed by that agent or the broker in the office. If the agent is selling their own listing, they must disclose that to the buyer in the property disclosure.

Typically, unrepresented buyers will call the listing agent whose name and number appears on the yard sign or RE magazine, then assume that agent works for them, not the seller. The agent's fiduciary duty is still to the seller, in that scenario. An ethical listing agent will ask the buyer if they are working with an agent, and go from there. If both parties agree, the listing agent can rep both sides of the transaction, usually reducing the commission a bit, because they will recieve 100% at closing, instead of the usual 65% - 35% split between two agents. This doesn't happen all too often, because a single office likely doesn't have a large enough inventory to show only their listings to a buyer.

These buyers should have smelled a rat if they only saw in-house listings, or bought this home from an office that was selling the whole development, without their own outside rep.

I am only referring to Washington guidelines, having been a broker's assistant and holding a license for a few years.

Realtors work for their client, whether they are the buyer or the seller. It's somewhat rare that realtors are able to represent both the buyer and seller in any transaction. This would be akin to being a defendant and allowing the prosecutor to represent you as well. Although a realtor does have a fiduciary duty to their client, it's still a conflict of interest to anyone with half a brain.

Had home prices continued to climb, this would not be a case at all. But, because San Diego is one of the coldest markets in the country, these people are trying to blame someone else for THEIR mistake and bad timing. I know a lot of realtors, and none of them have the persuasive skills to FORCE someone to buy a home they didn't want. The home was listed for $1.2 million, and they agreed to pay that. The home obviously appraised for the $1.2 million, otherwise they would not have been able to get a loan on the property. The only issue I see here is if there was any funny business with the appraisal. If not, then they paid market value for the property because both buyer and seller agreed and it appraised out. End of story. Next time, don't buy a million dollar home in a market that has gone up by 150% over a 3 year period.

Representing both buyer and seller as a dual agent can be beneficial to both parties: the seller (usually) pays less commission and can therefore have more flexibiltiy in selling price, which is good for the buyer. It can also be a huge conflict of interest. Our Broker closely supervised all aspects of these transactions, when they happened, which was very rarely. It's just not that common to have the perfect home in your own inventory and an unrepresented buyer, especially with many agents marketing themselves as "Buyer's Agents".

That presents another conflict: what if you, as the buyer's agent, are representing 2 or 3 parties who all want the same home? You must present all offers, but the timing of those could result in lost dollars to you, and you can't tell the seller you have a higher offer on your desk, without compromising your duty to the buyer you're repping at the moment...

Agreed on the appraisal: that could be the real sticking point.