Homeowners Seek to Sue Realtors® and Agents Over Falling Home Values

In the category of "not at all surprising news" would be where we filed this latest information.  It seems there's been a pretty significant uptick in the number of homeowners who are now attempting to sue the Realtor® or Agent as a result of falling home prices claiming they were misled as to the value.  As we have written about in the past several weeks year end 2022 ended with about 450,000 recent mortgages being underwater, and 60% of those (270,000) were transactions that closed in the first 9 months of 2022 alone. 

It's difficult to comprehend that the concept that values change, and not always for the better, is somehow novel to these folks.  A good portion of the claims challenging the value by way of the liability insurance carried by agents and Realtors® with the most common being issues of either non-disclosure or negligence.  Apparently, there are even sellers trying to make claims suggesting they lost money because they waited too long to sell.  Are we suggesting that an industry professional should escape liability for negligence or non-disclosure?  Absolutely NOT!  Should a Seller be entitled to some kind of retribution if the sale was postponed ONLY because they were advised to wait longer because prices would go up?  That's a possibility too!  However, as we also wrote about in of our recent posts on is that upward of 44% of recent home-buyers in 2022 have regrets about their decision and subsequent purchase.  Is there a possibility that at least some of these claims are from people who have those regrets and think that someone else is responsible for their paper losses?  Well, of all of the scenarios discussed, that's certainly one that can't be overlooked either.  With so much appreciation in so short a time frame, most of which was not based on any fundamentals but on a panacea created by a medical condition that we knew so little about, the potential for fallout like this almost seems inevitable. 

Our Realtor® community is one that we love and admire, and during these past few years they've been faced with a market unlike any we've seen in a long time, maybe ever.  Those who explained and documented the potential pitfalls of bidding over list price, waiving financing, appraisal, and even inspection contingencies are probably not the ones in question here, but in this litigious world in which we live, you never know!  The "slippery slope" that's being built here is a dangerous precedent for sure, for example if you bought a stock based on the recommendation of your financial advisor and that stock doesn't perform well or loses money, where does your personal responsibility and their professional responsibility begin an end?  Let's just try to agree that fear induced buying in any market can have unintended consequences, much like the type described here.

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