A lawsuit taking place in the San Diego area reminds me of the old saying, "Don't shoot the messenger." Just as stockholders tried to sue investment companies when their portfolios lost value during the dot-com bust, a homeowner is suing her Realtor in a declining real estate market. She claims that the five year old luxury home she bought wasn't the "good buy" that they were told it was. Much emphasis is being placed on the appraisal, As I learned in my college appraisal classes, appraisal is an imperfect science, often subjective in nature.
The lender decides who will do the appraisal, and the real estate agent sometimes assists the appraiser in providing documentation that will make sure the number comes in at the right point for the deal to close.
In the sub-prime scandals, some lenders pressured appraisers to come up with the "magic" number that would get the deal closed. They even threatened to withhold business if the appraiser didn't conclude that the property was worth what the buyer was willing to pay.
But this lawsuit seems to be more a case of "sour grapes"...buyers who purchased a home at the top of the market and need a scapegoat as they watch property values decline.
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