Homeowners often rely on local real estate agents to estimate the value of their property when it comes time to sell. A trustworthy agent with up-to-date information on the latest sales in the area can evaluate local market conditions and provide a reliable assessment. But what if the realtor's estimate is way off-target?
Earlier this month Judge Oren Schwartz of the Rishon Letzion Magistrate's Court ordered an agent, who had arranged the sale of a house at what turned out to be below market value, to compensate her clients by paying them NIS 165,000 for the loss, and to refund all NIS 10,000 of her brokerage fees. The agent was also charged NIS 18,000 in court costs.
Rafael and Ruth Shekel of Tel Aviv had been renting out a house they owned on Ha'Izdarechet Street in Kadima for years. In 2008 they finally decided to sell it and contacted a local agent, who had previously helped them rent it out. The agent, Anat Cohen-Brill, found buyers willing to pay NIS 1.05 million for the dwelling. The couple claimed she told them this was the best offer they could expect.
The Shekels sold the house and paid Cohen-Brill her NIS 10,000 fee. Following the sale, however, a dispute arose with the buyer and the couple decided to have the house professionally appraised. The house was assessed at about NIS 400,000 more than the price they received - so, with the assistance of attorney Rafi Shefter, they sued the agent for the difference and a refund of the fee.
Cohen-Brill countered that it was the plaintiffs who set the price and that she hadn't assessed the value of the house at all - and couldn't have as she lacked the necessary tools, since such is the job of a certified appraiser. She didn't have a broker's license, she claimed, and hadn't acted as agent in this transaction, and was therefore not required to act according to the requirements set out in the Real Estate Law. The money she got from the couple, she explained, wasn't for brokering the arrangement, but rather for helping them deal with the authorities and with workmen who renovated the structure.
The court rejected Cohen-Brill's claim that she hadn't acted as agent, noting that she invoiced the couple for "house-selling fees" and thus, in fact, brokered the transaction and was thus bound by the Real Estate Law to exercise prudence, fairness and good faith in her dealings.
"The fact that the defendant hadn't paid the required fee to the Registrar of Brokers and therefore didn't hold a current license doesn't mean she was absolved from the general requirement to demonstrate prudence," according to the ruling.
The court also rejected Cohen-Brill's claim that the couple had told her the price they expected for the house, arguing that she provided two conflicting versions of events: In her deposition she stated that the plaintiffs had told her by phone that they were interested in selling the house for $300,000, but in the cross-examination she said they had mentioned this price back in 2001.
"The plaintiffs' version is consistent with the fact that they are an elderly couple living in Tel Aviv and are unfamiliar with real estate prices in Kadima," wrote Judge Schwartz. "Under these circumstances I think it would be reasonable that they would ask the defendant, a resident of Kadima and someone who had provided them realty services in the past, how much they could receive for selling the house."
The court was left to decide on a fair assessment of the structure in question, and took into consideration its poor physical condition at the time of sale. The sellers said its actual market value was NIS 1.45 million and that the mistaken estimate had thus cost them about NIS 400,000. The judge, taking into account that the appraisal on behalf of the sellers was performed following renovation of the house, reduced its value at the time of sale to NIS 1.225 million - NIS 165,000 higher than the price at which it had actually been sold. The judge decided to award this difference to the plaintiffs, plus a refund of the agent's NIS 10,000 fee.
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