A Seller Regrets Taking
Advice From an Agent

Question: I put my home up for sale and sold it last summer on the advice of a real-estate agent. She told me that the market was about to collapse. She said the supply of homes was increasing, mortgage rates were going up and the length of time to sell a house was getting longer. She said if I didn't sell quickly, I might lose out just like people did during the dot-com crash a few years ago. I talked to my husband and I think we panicked. We sold our home in three days for full price. Since then the price of homes in our area has gone up, not down. Our old next-door neighbors just sold for $60,000 more than we did, and they have a smaller home. Do I have any recourse against the agent for the bad advice?

Sondra: Hindsight is always 20/20. Whenever we sell a home and prices continue to rise afterward, we wonder if we did the right thing. I sold a house in the San Francisco Bay area right after the dot-com crash for what I thought was a good price and today it's worth nearly 60% more. (I invested that money in another house which also has gone up in value.) When you sell your home, you take your chances. Of course, your real question is: Did the agent use undue influence to get you to sell?

Keep in mind that agents sometimes do pressure sellers to list. That, after all, is how they make commissions. And from what you say, the agent's arguments weren't all wrong (although her conclusion obviously was). In Los Angeles last summer the market did balk. Inventories increased, the average time to sell was longer, and mortgage rates were inching up. All this points to a slowing market.

What your agent also should have pointed out, however, was the tremendous shortage of housing in the area, which has been a main driving force behind higher prices. Of course, I doubt she could have foreseen that mortgage rates would fall by the end of the year. (They were recently around 5.6% again, approaching historic lows.)

Timing a sale to get optimum price is like reading tea leaves. Unless your agent guaranteed in writing that you'd lose money if you didn't sell, it was just her opinion. You can get mad at her just as you would at a stock broker who advised you to sell just before a stock went up in price. It was bad advice. But the fact remains, you made the decision to sell.

What's of more concern is that you said your home sold in just three days for full price during a lull in the market. This suggests that perhaps it was underpriced. Your agent should have assisted you in deciding on a fair price for your home and not panicked you into selling for less than your home was worth. I hope your agent prepared a comparative-market analysis showing what homes were selling for in your area in order to help you arrive at a fair price. If she didn't, and if she knowingly listed your home for significantly less than it was worth at the time in order to get a quick commission, she didn't live up to her responsibilities. If that's the case, you may want to call the broker of record at her office, or even an attorney. However, my suggestion is that you move on.

-- Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent books are "How to Get Started in Real Estate Investing" and "How to Buy a Home When You Can't Afford It" (McGraw-Hill, 2002).

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