By 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 (June 2007) by the Washington, D.C.-based Consumer Federation of America â€” found most 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.
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.