Open Response to Article: Discounters are Changing Ways of Doing Business

This is in response to an article dated July 29, 2007 entitled, "Discounters are changing ways of doing business."

In particular, to the following:

"The primary source of contention between the rest of the real estate industry and Redfin is that the company lists 'days on market' and price reductions on its Web site - information that agents do not offer until they have an exclusive contract with a buyer."

There seems to be some confusion here, because the majority of real estate professionals do not use exclusive buyer agreements with buyers. However, exclusive listing agreements are regularly used with sellers to list their properties.

Exclusive buyer agency agreements are mostly, if not totally, used by exclusive buyer agents and brokers, who work for companies that only represent buyers. These companies never take listings. The exclusive buyer agency option helps buyers avoid dual agency completely. There are some exclusive buyer offices that will offer FULL service and representation to buyers for the same amount of money a company like Redfin charges for limited services.

A company like Redfin also takes listings, so when a buyer makes an offer to buy through such a company, and the same company holds the listing of the subject property, the company becomes a dual agent. Dual agents are required to remain neutral between buyers and sellers in the same transaction. This can become a problem when a conflict arises between the two parties. Buyers and sellers must give their mutual consent to dual agency, which is unwise because it is a conflict of interest.

Dual agency is a conflict of interest, because when a buyer chooses an agent, they will expect their agent--and their agent's company--to represent their financial interests. Buyers want the lowest price possible, at the best possible terms in their favor. Conversely, a seller will expect their agent--and their agent's company--to negotiate for the highest price possible, at the best possible terms in their favor.

When a buyer and seller are represented by the same agent, or respectively by two different agents of the same company, these expectations are conflicting. This is dual agency, aka. dual representation. More consumers are becoming aware of the risks surrounding this agency option.

More Information Sources About Dual Agency:

http://www.dos.state.ny.us/cnsl/dualagcy.html

http://www.realestatelawyers.com/Dual-agency.cfm

http://www.usdoj.gov/atr/public/workshops/rewcom/213172.htm

New Learning Tools for Consumers from Mortgage Brokers Association

The Mortgage Brokers Association recently announced a new resource for consumers to help them make informed decisions about mortgages, and to teach them how to compare mortage products, as well as, how to choose the best one for themselves. This comes in response to the recent mortgage crisis that occurred within the subprime market. MBA is taking a leadership position in creating the resources needed to empower consumers, so that this crisis is not repeated in the future.

To quote the MBA's message from the home page of their new web site:

HomeLoanLearningCenter.com

"The HomeLoanLearningCenter.com provides step-by-step information on how to become financially literate. Armed with the facts, your next move could be into your own home. Learn about credit reports and scores; the true cost of owning a home; and how to compare the costs of owning versus renting a home. The Web site provides in-depth, easy-to-read home loan product information in the All About Mortgages section, which includes information on how to qualify for a loan, what the documents mean, what's in the mortgage payment and mortgage calculators to help consumers plan their payments."

Fair Fight in the Marketplace

This film is brought to you by the collaborative efforts of: Street Law, Inc, the American Antitrust Institute, Filmmakers Collaborative, and the Constitutional Rights Foundation.

This is a documentary about what antitrust laws are, and what they mean to everyone—consumers, small businesses, entrepreneurs, free enterprise, etc.

It is now airing on PBS—but, if it is not airing in your area, you can watch it here. Before positive changes can happen, we must all be aware of the problem—and most importantly—we must care about the problem, because antitrust affects us all in many different ways, and in many different industries; including the suppression of exclusive buyer agency in the real estate industry.

Learning resources are available by visiting www.fairfightfilm.org/learn.html




If you would like to help--spread the word about this film!