REAL EVIDENCE OF
WHICH REAL ESTATE "AGENTS"
WORK FOR YOU
AND WHICH WORK AGAINST YOU!
Photography and Eyewitness by
Ray Wilson is author of
BOUGHT, NOT SOLD: Single Agency, Buyers' Brokers, Flat fees, and the
Consumer Revolution in Real Estate
and a contributing writer to the International Real Estate Digest
ABOVE: A floor joist plainly slipping off a
support beam in plain view under an 8-unit condominium building. Supported by the
beam is less than one quarter inch of the joist.|
RIGHT: A new beam hastily installed to prevent collapse. Note green
markers, highlighting seven of twenty-two joists in a row
moving off a 38-foot section of beam, threatening the property and very lives of the residents.
Notice how OBVIOUS
the space is between the joists and the beams, repeated 22 times along
an out-in-the-open 38-foot beam! Yet, the deathtrap was never revealed
to buyers in at least a dozen condo sales from the late nineteen-eighties to the late
nineteen-nineties when it was finally observed by an astounded owner.
A dozen individual sales in this 8-unit building means a dozen
structural inspections! In addition
to the inspectors, there were appraisers and real estate agents. Every
one of these professionals failed to see (or at least to report)
the apparent grave risk to at least a dozen families!
The buyers didn't even look because they trusted the pro's...
MORAL OF THE STORY
Those kind of numbers, involving several non-associated firms and
individuals, mean there is far more wrong here than the isolated incompetence
or negligence of a few. The problem here is institutional -- and the
responsible institution is both nationwide and oppressively dominant within virtually
every locality! The fundamental element of that
institution is the real estate listing firm! Listing firms (representing
the sellers who "list" their property with them)
literally encompass about 98% of all real estate agents.
There is actually "good" in this -- a valuable lesson and remedy for those
who are about to buy real estate. Not one of these condo buyers bought with the
help of a buyer's agent! "Their" inspectors were
hired by sellers' agents who would not collect a commission if
the deal fell through.
Inspectors, appraisers, and even lenders who honestly expose
"unattractive" facts about value or property traits
get labelled as "deal breakers" and have good reason
to fear consequent boycott. Recently (1999), DATELINE-NBC did
an expose on inspectors under the thumb of listing agents.
The problem is so severe that as of this writing (2/19/01)
more than 4,500 appraisers have signed a
petition to Federal authority for relief
from lenders, real estate agents and others who exert pressure
to force them to "inflate values" and "ignore
True buyers' agents usually cost the buyers no additional commission,
and because they move on with the buyer until the right
property is found, do not lose a fee because a specific property is
not bought. Thus, they have no reason to try to force sales that are
not in the buyer's interest! Only they can be
counted upon to seek and support inspectors and appraisers who will
not cover up deficiencies. They themselves routinely look for such
things on behalf of their buyer clients.
If the traditional system here motivated so many sellerside
professionals to so consistently ignore buyers' interests even
in this highly critical matter of their actual safety,
then how can they be trusted to serve buyer interests in any matters
at all? Buyers need to use buyers' agents who are both trained,
motivated, and rewarded to make OR break deals exclusively in
accordance with the buyer's interests.
There is still a problem, as indicated by the frequent use of quotation
marks here around the word "agent." Many licensees are
no more honest about themselves as "agents" than about
property value and fitness. The independently written book,
BOUGHT, NOT SOLD spells out why only
"Exclusive Buyers' Agents" (EBAs)
(and the extremely rare "single agent") are true buyers' agents.
An EBA is someone who works only for buyers and is in an office
that works only for buyers, i.e., an "Exclusive Buyers' Office"
(EBO). (A "single agent"
in a tiny -- usually one-person -- office might work for buyers and sellers, but either
not at the same time, or only after determining they are not in the
Both buyers and sellers can use the historically established
and well-documented definition of "Exclusive Buyers'
Agent" (and of "Exclusive Sellers' Agent")
to take a measure of the integrity of any "experienced"
professional. Every consumer should use extreme
caution in dealing with those who twist the
definition to their own interests. The truth:
Still, some have the gall to call themselves "exclusive buyers'
agents" because they deal only with buyers in a listing office
(obligated to sellers)! Others even more absurdly make the claim based
on the agreement of the buyer to not use other agents.
- The word "exclusive" applies to a CLIENT (and not
an agent) when the client agrees in an "exclusive agency
agreement" to exclude the use of other agents. Thus a property is
an "exclusive listing" because the owner is the exclusive
client of the agent and will exclude other agents.
- The word "exclusive" applies to an AGENT (and not
a client) when the agent agrees in an "exclusive agency
agreement" to exclude provision of agency to clients whose
interests are adverse to the client signing the agreement. Thus,
the exclusive agent provides agency exclusively to buyers OR
exclusively to sellers, and never to both.
- The word "agent" applies to the FIRM rather than just
the individual licensee under the centuries-old Common Law of Agency.
This reflects the common-sense recognition of the interdependent
interests between individuals in a firm (which in fact MAKES it
a firm). Thus, a single firm cannot be an agent,
nor include individual agents, of both buyers and sellers!
Most outrageously, a number of state legislatures have cooperated
with well-financed real estate lobbies in creating bizarre loopholes
in the law of agency (predicted in BOUGHT, NOT SOLD). In the
most blatant example, these agency
masqueraders are given a new costume called "designated
agency." There, one licensee becomes an alleged "buyer's
agent" and another a "seller's agent" in the
same transaction because the firm's manager says so (designates them).
The good news is that even in states where legislators have been duped
into giving legal license to misrepresent, consumers NEVER
have to agree to less than full agency. Neither buyers nor sellers
get full agency from such "agents." At the least,
they should refuse to agree to pay full agency
commissions to anyone not providing full agency
service, i.e., to anyone other than a true Exclusive Buyer's Agent (EBA),
true Exclusive Sellers' Agent (ESA), or true Single Agent.
||What buyers and sellers need to do is walk into the real estate market with
their eyes wide open. The book,
BOUGHT, NOT SOLD was written by a legitimately credentialed
and independent social researcher. The endorsers on its cover include a former state
Attorney General, the head of a national consumer organization, and the former Federal Trade
Commission investigator whose 1983 FTC report of wholesale real estate industry misrepresentation launched the whole international buyer agency movement. Since Bought Not Sold's publication,
writers, editors, and practitioners have publically acclaimed the work.|
It is not simply about buyers'
agents, nor is it written just for buyers. It is about agency
and how it is necessary for both buyers and sellers in the real
estate marketplace. The book establishes that sellers are served
no better than buyers in the current system. EBA's are rare.
ESA's are almost non-existent!
BOTH BUYERS & SELLERS
NEED TO KNOW WHO IS WORKING FOR WHOM!
BOUGHT, NOT SOLD PROVIDES THE MEANS TO KNOW!