Deborah Elkins//April 2, 2009
Deborah Elkins//April 2, 2009//
Remember when real estate was a different kind of story?
Bidding wars. Tear-downs. Money all around.
Spring 2007. A woman who wants to sell her mother’s home talks to a real estate agent, who suggests a target price of $729,000 for the Fairfax property.
With a “pocket buyer” already in hand, the agent expects to pocket the full six-percent commission. The sellers apparently expect the agent to steer potential buyers to a relative “who worked as a loan officer in the then-burgeoning Northern Virginia real estate finance industry,” according to a new decision from Fairfax.
A second agent who noticed signs of an impending sale brought her clients to look at the property. Hearing the seller already had an offer at full asking price, they backed off from a bidding war.
That offer, however, had strings attached – a home inspection contingency and a “seller subsidy” that reduced the seller’s take, but not the agent’s. Amid “mutual hostility and mistrust,” the sellers fired their agent and negotiated a sale to the second set of buyers.
“Grievances and countergrievances flew” before local and state realty regulators. Litigation ensued.
The first agent sued for millions of dollars, alleging multiple theories of recovery.
In Northern Va. Real Estate Inc. v. Martins, Fairfax Circuit Judge Jonathan Thacher pokes holes in the agent’s claim for damages, which posited a commission on her sale to her pocket buyer, plus an additional 6 percent commission on a $2.1 million property built on the lot at some future date, after demolition of the existing structure. And $1.35 million on each of several defamation counts.
The most the plaintiff agent ever could have realized in the deal was $37,500, her commission from any initial agreement to list the property, the court said. The rest of the agent’s pie-in-the-sky claim was “to say it as kindly as possible, not ‘well grounded in fact,’” Thacher said.
Citing Ford Motor Co. v. Benitez, Thacher ordered sanctions against the plaintiff, after a hearing to determine the amount.
The “combination of so many frivolous claims, supported by such wild speculation, so virulently prosecuted even after any legitimate prospect of success had vanished, convinces the Court that the claims were not an oversight or mistake,” Thacher concluded.
By Deborah Elkins