REAL EVIDENCE OF WHICH REAL ESTATE "AGENTS"
WORK FOR YOU AND WHICH WORK AGAINST YOU!


Photography and Eyewitness by Ray Wilson

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...

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 deficiencies."

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.

MORAL OF THE STORY

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 same market.)

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:

  • 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!
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.

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!