A naive friend of mine bought a house and basically got taken advantage of by his real estate agent (with whom he had a buyer's agency agreement).

A few years ago my friend made an offer on a resale home on which there were a couple of other offers and ended up paying WAY too much...his real estate agent had told him explicitly how much over asking my friend should offer in order to get the house. The reasons the agent gave were stupid ones, too, in my opinion. For instance, another house on the street with tons of upgrades had recently sold for alot of money; the agent told my friend that a buyer might come in and snatch up my friend's house (which was similar on the outside but a fixer-upper inside) for the same amount of money as the upgraded house because, get this, "the buyer will see what the other house sold for, but because it's off the market now, he won't be able to look inside and compare it with the one you're now bidding on, so he'll think the two houses are pretty much comparable." He also showed my friend printouts of comparables which to me aren't all that comparable if you read the listings carefully and compare features/upgrades.

The proof he paid too much came recently when he was considering selling and asked a different agent what he might get for it. This agent told him that he probably has lost money on it although he held it for a few years. The new agent was surprised at the price paid and started to say something but said "I won't make any comments about your agent [the one who "helped" my friend buy the house]."

Are these types of shenanigans actually illegal? Or is this just a "file a complaint with the real estate board even though they won't do anything anyway" situation? I think his buyer's agent should go to jail for something like this. People have gone to prison for similar frauds too like selling "rare" coins to people over the phone for multiples of their true value.

The only advice I can give in this is to have your friend talk to a lawyer. Yes it is unethical, yes he paid too much, yes he should have consulted with someone else who has experience. Far too often people take the first thing they hear at face value and thats how they get hurt.

You posted this presumably to get info for your friend, that's great, but unfortunately, we don't really know the full story, so to speak. We don't know if your friend had to get an appraisal, if he had to take out a loan, or if he inspections done, we don't know how many, or high other offers may have been. We also don't know the job situation in the community, crime rates, if there's new construction, the market values, and trends for this area, both currently, and when the home was purchased. We don't the qualification of either the 1st agent that sold him the house, nor do we know the qualifications of the agent that did the recent CMA. We also don't know who was holding the gun to your friend's head, to get him to purchase the house.

You're ready to crucify this agent, which may be right, I really can't say because of these, and probably other unknowns.

Its really hard to know exactly what happened as you stated a few years ago. Plus it was your friend and you was not really there involved in the transaction.

Thats not really proof at all. That is just one agents opinion and you are trying to comment on what happend several years ago. The agent may just be trying to get your frind to give him/her the listing at a lower price.

File a complaint for what. To be honest you need a whole lot more then just one agent’s opinion that your friend overpaid several years ago. Plus as you mentioned you was involved in a multi offer situation. You really do not know what the other offers were. It may be that anything less then your friend's offer would not have gotten it for your friend. Plus did not your friend get an appraisal several years ago. And what did that tell you

Yes I would recomend that

For you to say that with only what we know is totally out of line. You really do not know what happened several years ago. Nor did you ask any pertinent questions that you would need to know to actually make that call. What ethics was actually broken? An agent a few several years latter says his/her friend over paid. Did you ask “Is the market appreciating and or depreciation?” If it’s a depreciating market then maybe she paid correctly several years ago. Did you ask if the buyer wanted help with closing costs and had to raise the price to accommodate? Was there personal property involved in the transaction? I am not saying those are the cases here. Only to point out that you sir did not even look into that if it’s even a possibility before you start crying ethics violations. Again I point out this is a friend that was not part of the transaction and most likely has never even scene the contract to even know what’s in it.

I have to agree with Alan, there is simply not enough information to form a conclusion. It is difficult to place a value on a property. I do a lot of price opinions, and there are times that I can't justify a value range narrower than a $60,000 spread on homes in <$200,000 markets.

Based on the multiple offer situation, I would say that the original asking price was below what many people would consider a fair price. How far below, I don't know, but it's a safe bet to say that if everyone was aware of the multiple offer situation, it's VERY likely that several bids were above the asking price. Your fiend's realtor obviously gave him some good advice: Your friend made the successful bid on the property. A thousand dollars less might not have bought it, you don't know unless you talk to the seller.

"Far too often people take the first thing they hear at face value............"

Ain't it so! :p

You sure came up with a pot full of conclusions based on a second hand story about something that happened several years ago.

I would wonder if the 'friend' has been happy living in his new home these past few years???

I have no idea if you're a real estate licensee or not but if you are (or even if you're not) exactly what in the world do you think a lawyer could accomplish at this time???

Maybe overpaying for a house you want and like enough to buy may not be the smartest move one could make but I don't think it rises to the level of a felony.

I believe appraiser's go by square foot first although many other things do come into play. I would be a good friend and tell your friend seems like the deal was Ok to you. If it was a multiple offer situtation the only way to get the house would be to pay the most. Usually the highest bidder wins. I see people in my area pay $20,000 too much on purpose. They want the house at all cost. They have already lost 4 homes they looked at to others.
I must agree there is too much information to make a decision after several years. Give your friend piece of mind. Tell her it was a good deal in your view. By running down other agents we hurt ourselves equally.

As a buyer's agent I always want to find at least 3 or 4 properties for a client that they'd like to buy, and make fair, competitive offers on them,one at a time. By contrast, when a client says "I have to have THIS house", strategy is out the window and they'll have to make a generous offer. Did your friend intend to sell this home in just a few years when they originally bought the home? As a short term investment, bad deal, as a long term home, not neccessarily bad.