The Right Place

We're rethinking our stance on several issues, including the most pressing issue facing Americans today: Bush's war in Iraq.

And here's my column

Blast the fog; When the agent's your partner in the poker game Byline: Sally Duros

By its nature, buying and selling a house is competitive, a
win-lose negotiation. A textbook definition of this type of
negotiation says that the goals of one party are in fundamental and
direct conflict with the goals of the other party. The buyer and
the seller is each fighting over a fixed and limited resource and
each party wants to maximize his or her share of resources.

Like a poker game, these kinds of negotiations will often employ
strategies and tactics to guard information. You show your hand
only when it provides a strategic advantage. Each party generates
fog to create a mystery over how much they are willing to give in
terms of sales price or purchase offer.

Some academics and others consider competitive negotiation a kind
of relic, but common sense says buying and selling a home in most
situations will remain competitive as long as there is a desire on
the seller's part to make a profit from the sale and on the buyer's
to pay a "fair" price.

Given the numbers of dollars involved in these complex and fragile
negotiations, it makes sense that most of us work with agents to
get the deal done.

Negotiating that competitive fog by ourselves seems a daunting
challenge. But what we don't count on negotiating is the fog that
our broker or agent might be blowing our way.

A survey released this week by the Washington, D.C.-based Consumer
Federation of America - ost Americans view real estate agents,
brokers and services favorably. In fact, among respondents in the
sample who had recently used a broker or agent, 84 percent viewed
them favorably.

But all impressions of real estate agents are not rosy.

The survey also found we understand less than we think about what
brokers and Realtors do for us, and that we specifically dislike
some practices Realtors and brokers engage in regularly, but don't
tell us about.

Consumers thought differently when asked about specific common
practices in real estate. For example, the practice of dual agency
says that an agent can represent both buyer and seller in the real
estate sale. The majority of consumers surveyed do not think the
agent can operate effectively on behalf of the consumer in a dual
role and that they are, in fact, in danger of a conflict of
interest. Dual agency is allowed in Illinois and in most states.

Among other survey findings:

- Only 36 percent of all respondents said they know "a lot" or "a
fair amount" about "real estate agents and brokers and their
consumer services;

- Only 34 percent knew that the local multiple listing service is
the most complete source of information about homes for sale;

- Only 26 percent knew that commissions can be negotiated; instead
41 percent thought that commissions are set by the industry and 13
percent believed they are set by state law.

"Home sellers and buyers who think they understand a complicated
industry, yet in fact do not, are at a disadvantage in obtaining
effective representation, reasonable commissions, adequate redress,
and for buyers, complete information about listings," said Stephen
Brobeck, executive director of the Consumer Federation of America,
who analyzed the data.

Classic negotiations breed two dilemmas, the dilemma of honesty and
the dilemma of trust. When it comes to being honest, telling the
person everything might provide an opening for them to take
advantage of you, while not telling them might stall negotiations.
In the dilemma of trust, if you trust everything that you are told
then you are in danger of being taken advantage of.

Most real estate agents would expect the buyer or seller to be
honest so that they can best represent them in the negotiation.
Buyers and sellers in return are expecting the same honesty from
their agents. It's only from honesty that we can build trust.

"To some extent it's incumbent on the customer to ask questions,"
said Michael Golden, president elect of the Chicago Association of
Realtors, and a partner of @properties. "Our company is an open
book." But, he said, "It is also incumbent on the practitioner to
be open and honest." He added that the association's role is to
support the real estate practitioners, while it is the real estate
practitioner's job to educate the consumer.

In this age of transparency, consumers have been given greater
power in the real estate transaction via the Internet and other
technologies -- like the buyer rebates Howard Wolinsky describes in
our cover story today.

It's time for the real estate industry to jettison practices that
create greater fog between agent and customer.

About the survey: Data collected by the Opinion Research
Corporation for AARP in June 2006 was analyzed by the Consumer
Federation of America. A series of questions about working with
real estate agents was directed to 2,036 individuals, all of whom
had used a broker or agent at one time, and 565 of whom had used a
real estate agent or broker in the past five years. All survey
questions and responses can be found at www.consumerfed.org.

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Posted by Sally Duros on July 12, 2007 07:46 PM | Permalink