Buyers sue their agent
For at least a year now I have been predicting and sharing with my friends my view that it is only a matter of time until buyers start to sue their real estate agents who 'are at fault' for their money losing investment.
Some of you may remember what happened after the 2000 dot.com meltdown and the class action lawsuits vs. Merrill Lynch & friends for recommending and pushing what turned out to be worthless investments.
That time has come... at least the opening salvo, a lawsuit filed in California by buyers vs. their RE/MAX agent who allegedly was more concerned about his commission than pointing out that the buyers were overpaying. See today's Sarasota Herald Tribune Article.
While on one hand I do not condone the 'tradition' of this society to take zero responsibility for one's actions - hence the 'ambulance chaser/attorney on a contingency filing frivolous suits phenomena' so unique to the U.S. - I also feel at the same time that it is time that someone holds those in our profession who think they can push people recklessly into risky deals so they can earn a hefty commission accountable.
And that's what this is about in my opinion, and frankly I sincerely hope that we will see more lawsuits doing just that - holding people and organizations accountable for their actions.
During the 'boom years' many agents were repeating the mantra of "buy Buy BUY NOW before it's too late". Pushing condo conversion and new construction projects as "no risk", "no brainer" investments; convincing people to max out their equities, refinance their homes, take out HELOC's to form their down payment, along with convenient Pay Option ARM mortgages with low teaser rates conveniently arranged by their mortgage broker buddies ("don't worry, you'll sell that place for a huge profit long before the rate will adjust"), and so on.
Real Estate agents acting as investment advisors, pushing high risk investments with 90%+ leverage so they can net a healthy commission, often selling people who had no business making one investment, let along investing in multiple properties, enabled by the now infamous 'liar loans', all add up to certain disaster.
The result: Countless people are now losing their credit rating, going into foreclosure, or worse. Many are desperately trying to rent properties for half of what their costs are and given that their property is now worth sometimes only half of what they paid for it, they are prolonging the inevitable.
Yes, many of these 'investors' were greedy and in many cases they deserved the losses they incurred. At the same time however, this does not negate the fact that many agents worked people who do not fall into this category 'over' until they finally gave in and participated in what may well turn out to be the biggest Ponzi Scheme in modern history. And THOSE agents do deserve to be held accountable.
It certainly will be very interesting to watch how this will play out in the year/s to come. My hope is that it will act as a catalyst to help clean up the industry.
Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending
PS: I want to make it clear that there are many more hardworking, honest real estate agents than there are those who I would consider to be - well - at the bottom of the barrel. This is not about lumping all real estate agents together to say they are greedy pushers of worthless real estate investments. Unfortunately though there are many who are, and it is those who need to be held accountable.
Some of you may remember what happened after the 2000 dot.com meltdown and the class action lawsuits vs. Merrill Lynch & friends for recommending and pushing what turned out to be worthless investments.
That time has come... at least the opening salvo, a lawsuit filed in California by buyers vs. their RE/MAX agent who allegedly was more concerned about his commission than pointing out that the buyers were overpaying. See today's Sarasota Herald Tribune Article.
While on one hand I do not condone the 'tradition' of this society to take zero responsibility for one's actions - hence the 'ambulance chaser/attorney on a contingency filing frivolous suits phenomena' so unique to the U.S. - I also feel at the same time that it is time that someone holds those in our profession who think they can push people recklessly into risky deals so they can earn a hefty commission accountable.
And that's what this is about in my opinion, and frankly I sincerely hope that we will see more lawsuits doing just that - holding people and organizations accountable for their actions.
During the 'boom years' many agents were repeating the mantra of "buy Buy BUY NOW before it's too late". Pushing condo conversion and new construction projects as "no risk", "no brainer" investments; convincing people to max out their equities, refinance their homes, take out HELOC's to form their down payment, along with convenient Pay Option ARM mortgages with low teaser rates conveniently arranged by their mortgage broker buddies ("don't worry, you'll sell that place for a huge profit long before the rate will adjust"), and so on.
Real Estate agents acting as investment advisors, pushing high risk investments with 90%+ leverage so they can net a healthy commission, often selling people who had no business making one investment, let along investing in multiple properties, enabled by the now infamous 'liar loans', all add up to certain disaster.
The result: Countless people are now losing their credit rating, going into foreclosure, or worse. Many are desperately trying to rent properties for half of what their costs are and given that their property is now worth sometimes only half of what they paid for it, they are prolonging the inevitable.
Yes, many of these 'investors' were greedy and in many cases they deserved the losses they incurred. At the same time however, this does not negate the fact that many agents worked people who do not fall into this category 'over' until they finally gave in and participated in what may well turn out to be the biggest Ponzi Scheme in modern history. And THOSE agents do deserve to be held accountable.
It certainly will be very interesting to watch how this will play out in the year/s to come. My hope is that it will act as a catalyst to help clean up the industry.
Thomas Heimann, President & CEO
BRAVO REAL ESTATE SOLUTIONS
Bravo Brokers/Bravo Title/Bravo Lending
PS: I want to make it clear that there are many more hardworking, honest real estate agents than there are those who I would consider to be - well - at the bottom of the barrel. This is not about lumping all real estate agents together to say they are greedy pushers of worthless real estate investments. Unfortunately though there are many who are, and it is those who need to be held accountable.
posted by Thomas Heimann at 5:29 PM
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