Bush to unveil plan to help homeowners

Today brought news from the Nation's Capitol that President Bush plans to help homeowners who have fallen victim to the surging mortgage crisis. While this will be a relief to some, there are many who will not qualify for aid under this new plan. You can read more about it in today's headlines from CNN Money.

As previously mentioned, it is important to stress again that planning a purchase is the key to a successful real estate experience--both in the short and long term. Buyers who take the time to plan will usually do the necessary research on everything including mortgage products, instead of leaving it to chance, and getting burned in the end. A knowledgeable exclusive buyer's advocate can be a valuable asset to buyers in the planning process and through every step of the purchase process.

The House Passes H.R. 3915: The Mortgage Reform Bill!

Some interesting news that will impact the mortgage industry.

"On Thursday, by a vote of 291-127, the House passed H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, sponsored by Representative Brad Miller. The bill would enact standards on mortgage brokers, lenders, and Wall Street companies. Brokers and lenders would be responsible for guaranteeing that borrowers will be able to repay "adjustable rate" mortgages that will reset to higher payments in the future. They would also have to show that refinancing is to the borrower's advantage. Mortgage brokers and loan officers would have to be licensed and registered with the government."

EBA Gives Good Advice: When NOT to Buy Real Estate

The Internet is full of real estate articles and blogs that say "now is the time to buy," but here is one blog entry that explains when it would not be a good time to buy. The message in this article carries a lot of merit, because part of a successful real estate purchase is knowing not only when to buy, but also when not to buy. The blog entry is by Exclusive Buyers Realty in San Antonio.

While it is true that we are in the midst of a buyer's market, it does not mean that every buyer is in a position to purchase a home, or invest in property. A few of the reasons given by Exclusive Buyers Realty include changing jobs, having low credit scores, or relocating to an area without being familiar with the communities in the area. This blog is a refreshing change of pace, and it is well worth the read. Enjoy!

A Rebuttal for Exclusive Buyer Agency Agreements Against Erroneous Fallacies

The point of this blog is not to bash anyone, but to present facts as they are in an effort to clear up any misunderstandings, and to allow readers the opportunity to evaluate all the facts, so that they can decide for themselves what is right. I think it is important for people to have all of the information they need from an objective point of view, and not from a biased perspective tilted in favor of ones own business model.


Melson wrote:

“Indeed, an argument can be made that offering a high incentive (locally, 3% or more) to a buyer's agent is one of the better ways to get the property sold. Not only do many buyer's agents shop that way explicitly, but if they have an exclusive contract that says 3% (as many do, because their clients aren't educated enough to know what a crock exclusive buyer's agency agreements are in the first place, but they'll also willingly trust the chain agent as to what is "standard").”

Now the truth:

Speaking for myself, I do not look at commission rates when searching for properties. I look for properties that fit my client’s needs and wants. Secondly, every exclusive buyer agency agreement should have some sort of a realease or exit clause, if it does not, then buyers should not sign it. Having a release clause means that if either buyer or agent becomes “disenchanted,” written notice is all that is needed to terminate the agreement.

Under a non-exclusive buyer agency agreement, a buyer will still be obligated to buy through the agent who introduced the property under contract. An exclusive buyer agency agreement is no different. However, with a realease clause, if no property was found, and the exclusive buyer agency agreement is terminated in writing, then no commission is due. Buyers should review ALL written agency agreements with their attorney. This is how a buyer makes certain that this language is part of an exclusive buyer agency agreement.

Now, going by the "crockery" logic, if exclusive buyer agency agreements are a “crock,” then why aren't exclusive-right-to-sell agreements a “crock,” as well--since these two agreements are, after all, equivalent counterparts?

Melson wrote:

“If the Cooperating Broker's percentage is lower than what it shows on the buyer's agency agreement, that buyer will need to come up with more cash to pay their agent, from out of their limited pool of available cash. When that buyer's agent is in a position to demand 3% whatever property their victim buys, even if they didn't find it and weren't involved, that means properties paying less than that aren't contenders for this buyer's business, unless they've got so much available cash that it just isn't a constraint, and that is rare.”

Now the truth:

First of all, buyers who work with exclusive buyer agents (under exclusive buyer agency agreements) are hardly "victims," but they are progressive thinkers. Buyers can negotiate exclusive buyer agency agreements to include, for example, language that states the commission earned will be X%, OR the percentage offered by the listing office. Furthermore, a buyer and a buyer's agent can agree upfront to waive a portion of the commission if the property listing offers a "selling office commission" that is less than what was agreed upon in the exclusive buyer agency agreement. Three percent is not cast in stone.

Any good real estate attorney can advise buyers on how to accomplish this, and draft the necessary language for such a provision.

Admittedly, Melson is very biased against exclusive buyer agency agreements, so his opinions in this matter are not going to be very objective. However, he applies a double-standard when it comes to sellers signing Exclusive Right to Sell Agreements--the equivalent counterpart of an Exclusive Buyer Agency Agreement:

“As I said in Exclusive Right to Sell Versus Exclusive Agency, it is in the client's best interest to sign an exclusive right to sell, because the agent will have no mental reservations about whether they will get paid if the property sells.”

Melson wrote:

“A better buyer's agent puts a lower number on a nonexclusive contract, and if they get more, that's certainly fine with them, but because they have a non-exclusive contract, they don't get anything if the buyers become disenchanted with them and stop working with them.”


Question: Would a seller's agent consider working this way? Most, if not all, would not. Most listing agents will not offer real estate services to sellers without some sort of exclusive agreement, because they want to be assured that they are not working for free--after all, this is their job. For that matter, would anyone want to go to work, if they knew they might not receive pay; whether it is a real estate job or otherwise? Buyer agents are no different. Melson applies a double standard again. The truth is, buyers who sign an exclusive buyer agency agreement can terminate the agency relationship with their buyer’s agent, as long as the agreement contains some sort of release or exit clause, and there is no property under contract.

An attorney can advise buyers on how to insert a release clause when negotiating an exclusive buyer agency agreement. A real estate attorney is a valuable part of a buyer's real estate team.

As far as being locked in, regardless of whether a buyer agency agreement is exclusive or non-exclusive, a buyer will be obligated to work through a certain agent or broker if that particular agent or broker introduced the buyer to the property under contract. It’s called procuring cause.

Melson wrote:

“This gives a buyer's agent with a non-exclusive contract the incentive to find the property that's a real value to the clients as quickly as possible. I care far less about whether I'm getting two or three percent or something in between on a particular property, than I do about finding the property my clients want that's within their budget.”

Another question—if a non-exclusive contract is such a “value” to buyers, then why is this "value" not extended to sellers, as well? Does this seem fair? Furthermore, any agent or broker who is truly passionate about their profession is going to work hard for their clients, because they want to earn their client’s trust, loyalty, and future business.

Melson wrote:

“My incentive is to make the clients as happy as possible so that I do get paid, because if I don't, I won't. But the buyer's agent with an exclusive contract that pays three percent has a different set of incentives, which is another reason I advise strongly against signing exclusive buyer's agency agreements, and the existence of such creatures is the reason why it may be a good idea for sellers to offer a higher percentage to a buyer's agent.”

Now, the truth:

A buyer’s agent with an exclusive buyer agency agreement is no different than a seller’s agent with an exclusive-right-to-sell agreement. Melson speaks in general terms, as if to say that all buyer agents working through exclusive buyer agency agreements are untrustworthy. However, he is wrong on several points.

The choice of working on an exclusive or non-exclusive basis is not a matter of right or wrong, but a matter of preference—for example, a real estate investor may require minimum service and no guidance from a buyer’s agent. These types of buyers are usually very experienced with many years of real estate investing behind them, they typically have long-term banking relationships established, and because of this, their financing is often times readily available. These types of buyers know exactly what they want, and exactly what they need. In this case, a non-exclusive buyer agency agreement might work best for them. However, buyers that need or prefer to have more assistance and advocacy on their side are better off working on an exclusive agency basis, because this agency option offers full buyer support at every step.

Therefore, it depends on a buyer’s particular situation which form of buyer agency works best for them, but regardless of the chosen form, all agreements should be reviewed by an attorney before signing them around.

The Subprime Blame Game: A Heated Discussion

Many people have different ideas about where to place the blame for all the problems in the mortgage market. This particular blog entertains the idea that maybe agents are somewhat to blame. However, I disagree with this logic, because doing so makes sweeping generalizations against all agents, brokers, and Realtors--which is not right, nor is it fair.

While many disagreed with what this blog implied, there were those who were content to say that "all Realtors" are alike. They claimed that it was the "greed of Realtors" that helped cause the current crisis in the mortgage market, and that Realtors supposedly misled buyers. While there are some agents, brokers, and Realtors who act unethically, to say that all are alike is a flawed and unfair stereotype.

Many buyers do not understand the responsibilities they have to themselves when it comes to making major financial decisions like purchasing a home. Many go into the market without having a plan, and most do not consult with their legal and financial advisors before signing mortgage and closing documents. Buyers should become well-informed--taking the time to plan things out well in advance. A good buyer's agent should be able to assist buyers with the research required for building a solid plan, as well assist in the plan's implementation, but it is ultimately the buyer's responsibility to review and finalize these plans with their legal and financial advisors before starting. In most states, brokers and agents are prohibited from interpreting legal language and giving legal or financial advice unless they are attorneys or accountants, as well.

Here are a few relevant quotes from a book by Charles A. Jaffe, called “How to Hire Financial Help the Right Way.” 2nd Ed.:


Regarding the act of taking financial responsibility:

“One of the most responsible actions anyone can take toward managing their money is to own up to their shortcomings and to pursue assistance for those weaknesses in a strong, self-assured manner. There is virtually nothing in money management that you cannot do yourself, but there is a big difference between simply taking on the task and actually doing it well. Whether it is buying stocks without a broker, building a portfolio of mutual funds, or purchasing life insurance, dabbling almost always leads to disaster. I'm a big believer in doing as much as possible on your own, provided you understand this simple strategy for managing things yourself: Go strong or don't go at all. The problem is that many people do neither. ” (Jaffe p. 1).

Regarding the abdication of financial responsibility:

"They don't have the know-how to do it themselves and don't want to take the time to learn, but they also don't want to hire outside counsel. They get their information in snippets, from friends, in the papers or magazines, from radio and television programs, at the barber shop or beauty salon, or in online chat rooms, and they wind up with a patchwork of products instead of a blanket of financial security. Worse yet, the decision to hire an adviser becomes an abdication of responsibility, rather than an aggressive move to make things better. Instead of choosing their helpers carefully—matching skills to needs and doing the interviews necessary to create the appropriate level of comfort—they look upon the hiring decision as a means to an end, as in ‘If I hire this person to do my taxes, I'll never have to worry about my taxes again’” (Jaffe p. 1 - 2).

Regarding what many people fail to understand :

“And that's where folks like my friend come to the conclusion that people who want or need assistance simply can't help themselves. They perceive financial relationships as an all-or-nothing proposition, either done on your own or handed off to someone in exchange for a hefty fee. Like most, they fail to recognize that the person who hires advisers must then manage those helpers and remain intimately involved in making decisions” (Jaffe p. 2).

Cite Source:

The Right Way to Hire Financial Help by Charles A. Jaffe

In the case of mortgage documents, it should be common sense that an attorney should review them--because in essence--they are legal documents. However, many buyers fail to do this. Then when something goes wrong, critics are quick to put the blame on someone else...like the entire real estate industry. Needless to say, it is the responsibility of consumers to become well-informed and prepared before entering the real estate market; this includes understanding the difference between available agency options, understanding the advantages and disadvantages of certain mortgage products, having a pre-approval in hand before entering the market, having detailed information and demographics about prospective neighborhoods, and saving enough cash to cover a downpayment in addition to any reports or inspections that might be necessary.

Planning is the key to a smooth purchase transaction, and reviewing closing documents with an attorney is key to spotting unnacceptable or risky loan terms.

Buyer Wants To Know Why Broker Is Showing Own Agency Listings Only

In 2005, Realty Times columnist Blanche Evans responded to a Realtor looking for information in order to answer a buyer seeking an answer to why her broker is “showing her only the agency’s listings, and not all of the properties available that would be best for her.”

Blanche did a great job of covering all of the bases. She talks about the traditional way agents do business in real estate, as well as how and why a traditional agent would work to increase their “sides” per transaction, and the logic behind the different agency options available to buyers. I thought her article was both insightful and accurate. Although this article is a couple of years old, the information presented are still very relevant today. Blanche's article is definitely worth the read.

Latest NAR Forecast Indicates Mortgage Market Improving for 2008

On October 10, a press release from the National Association of Realtors paints an improving picture in the mortgage market. According the press release, senior economist Lawrence Yun said that this improving forecast is due in part to “widening credit availability,” and that “conforming loans are abundantly available at historically favorable mortgage rates.” Other factors cited are the reduction of new home starts, because it reduces the amount of inventory, which Yun claims “will help lower inventory and firm up home prices.”

I should note that buyers who cannot qualify for a conforming mortgage might still experience difficulty obtaining the financing they need to make a home purchase. Speaking with a mortgage consultant and obtaining a mortgage pre-approval ahead of time is always advisable. Knowing your home buying limits in advance will go a long way to reduce---if not eliminate---uncertainty and anxiety at closing.

Why Buyers and Sellers Should Not Be Treated Differently

A blog entry recently surfaced in the blogosphere from a San Diego Realtor who claims to be a Buyer’s Realtor, but in reality, he is a traditional Realtor, because he also works with sellers. Although this agent’s name will be spared, the focus of this blog entry will deal with the reasons why buyers should not be treated any differently than sellers. This distinction is very important, because buyers have traditionally been underserved and uninformed in the real estate industry--which is over 100 years old in the United States.

This agent wrote a hypothetical scenario of how he goes about critiquing a property. He did this by using a one-sided role-playing monologue to show how he works. Once he finished his one-man monologue, he started to explain the generic “benefits” of working with him, and then went on to make the assertion that in order to work with him, he would require a non-exclusive buyer’s agreement—along with his interpretation of the “benefits” of working in a non-exclusive capacity. The fallacy of his perceived “non-exclusive buyer benefits” will be explored with the use of critical thinking.

Using critical thinking skills, a person has to wonder if this agent would work in a non-exclusive capacity with a seller—and if not, why? After reading his web site, it has been found that he does not work with sellers on a non-exclusive basis; most listing agents do not. A good listing agent will go the distance for the sellers they exclusively represent. Does a buyer not deserve to receive the same level of service that a seller would receive? Why should buyers be treated any differently? Does this Realtor not understand that exclusive representation for buyers is only fair, considering the level of service and representation sellers have traditionally received for over a century? Why should consumers receive anything less as a buyer than they would as a seller, because a seller will usually become a buyer at some point in the future?

Lastly, this agent claims that it's only fair that buyers work through a non-exclusive agreement, because they are free to work with whomever they want. However, the decision to work under an exclusive agreement--or a non-exclusive agreement--is not a matter of fairness, but instead, a matter of buyer preference; because it depends on the level of service that a buyer wants to have. Buyers must decide for themselves whether they want to be treated as a client, or treated as a customer. As a client, buyers demand and get the best level of personal service from the professionals they work with, while buyers who are only customers are satisfied with—or are unaware of—arms-length transactional-based service.

An agent who offers transactional-based service is not concerned with the overall buying experience of buyers. Instead, they are only concerned with handling the particulars for the properties they find for buyers, also known as "procuring cause." Such an agent cannot call themselves an advocate for the buyer, who takes a personal interest in providing a level of service that includes the entire buying experience.

This level of service is the direct result of agent-client relationships that build over time. This keeps clients coming back in the future, because they know they will not be treated as a sales statistic. Such relationships include getting to know clients over time, getting to know their unique situations, getting to know their individual priorities, and taking all of this information into account when creating customized reports based on client needs, related research, compiled market data, interpretation of market trends, and area statistics. An advocate will synthesize all of this important information into a useful and valuable report that will assist their clients in making well-informed buying decisions based on their own unique situations.

This level of service is what a buyer receives as a client under an exclusive buyer agency agreement--not as a customer under a non-exclusive agreement. It also needs to be said that a traditional buyer agency agreement can be signed on an exclusive basis--meaning that a buyer agrees to work only with a particular agent from a traditional real estate office. However, if a buyer agent asks a buyer to consent to dual agency in writing, then the agreement is not for exclusive buyer agency services--which completely prohibits dual agency.

Seller’s receive a greater level of service from their exclusive listing agents, so why shouldn’t a buyer receive this level of service from their exclusive buyer’s agent? If a buyer is satisfied with an arms-length transaction, then a non-exclusive agreement may be right for them. However, buyers who demand the best service should insist on an exclusive buyer agency agreement, prohibiting dual agency, and they should articulate what they expect and need under the agreement.

Mortgage Problems Continue To Hamper Pending Home Sales

On October 2nd, the National Association of Realtors reported that pending sales of existing homes "will be dampened near-term as mortgage disruptions continue to impact the housing market..."

NAR senior economist Lawrence Yun said that a separate internal survey of NAR members revealed that more than 10 percent of sales contracts fell through at the last moment in August because of cancelled loan commitments.

Read more about it, and get the full story here.

NAR Reports August Existing-Home Sales Fall Due To Temporary Mortgage Problems

In a press release for the National Association of Realtors entitled, "August Existing-Home Sales Fall on Temporary Mortgage Problems," Walt Molony cited news that existing home sales has fallen due to the problem of mortgage unavailability in the market. This problem was described as "peaking," which attests to this issue being far from over. Or is it?

"Total existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 4.3 percent to a seasonally adjusted annual rate1 of 5.50 million units in August from a level of 5.75 million in July, and are 12.8 percent below the 6.31 million-unit pace in August 2006" (Molony).

According to Molony, Lawrence Yun, a Senior Economist at the National Association of Realtors, said he had expected the decline that resulted from a rise in cancelled and postponed sales transactions; which occurred when loan commitments fell through. This trend is expected to continue through September. However, Molony cited a different perspective from NAR President, Pat V. Combs, when she said that the outlook is actually improving:

"'Mortgage interest rates have been declining and loan availability is improving,' she said. 'Movements to enhance the FHA loan program and to raise the limits for conventional financing could provide additional relief, and it looks like the worse of the mortgage availability problem is behind us...The abundant choice of homes is permitting buyers to better negotiate price and terms. There are good opportunities in the market now, especially for first-time buyers'" (Malony, Combs).

Read full press release: "August Existing-Home Sales Fall on Temporary Mortgage Problems"

The Tale of Betty Buyer, As Told by Carla Muss-Jacobs

Every now and then someone comes along and offers up an anecdote that really cuts to the chase of why certain things are important, such as buyer agency--and most importantly--exclusive buyer agency. Carla Muss-Jacobs is an EBA in the Portland area, and she has written such an anectdote in her article entitled, "What Buyers Do Wrong." While she presents the scenario in a general and non-specific manner through her character "Betty Buyer," she clearly describes the common mistake that many homebuyers make when divulging too much information to representatives of the seller--often times not realizing how they have compromised themselves, and their negotiating position:

“The Tale of Betty Buyer: Betty goes out on Sunday just to get the paper. But while out, she sees an Open House sign in the neighborhood and drops in. The listing agent greets her, and Betty seems very impressed with the place. She tells the listing agent that she lives in the neighborhood and saw the For Sale sign go up a week ago. The agent tells Betty this is the first Open House, and it’s going really well – quite a few people have been in to tour...Betty didn’t seem to find any flyers outside, and wondered how much they listed the place. The listing agent tells her, and Betty is surprised....‘WOW – I can afford this! I just got qualified online. But, I’m good to go for $50,000 more!’...Yeah! It happens just like this. A buyers’ anxious, nervous energy can get the best of them. They talk too much. Not only did Betty show an interest in the home, but she also told the listing agent she can buy it . . . and not only that . . . but can spend $50,000 MORE!”

Cite Source: "What Buyers Do Wrong" by Carla Muss-Jacobs, EBA in Portland Oregon.

Carla also suggests two rules for buyers to live by:

"Rule #1 as a Buyer: You Have the Right to Remain Silent!"

And...

"Rule #2 . . . obtain a BUYERS AGENT, and if you really want to do yourself a favor, obtain an EXCLUSIVE BUYERS AGENT!"

For more information, check out Carla's full article,"What Buyers Do Wrong."

Good Article: Careless Buyers Making Deal-Killer Mistakes

An interesting article by M. Anthony Carr entitled, "Careless Buyers Making Deal-Killer Mistakes," discusses a couple of scenarios regarding the ways that buyers can sabotage themselves in a real estate transaction:

"Buyers can get great deals in today's market, but they must not be overcome with unnecessary fear, or make financial decisions that could harm their financial standing" (Carr).

Cite Source: "Careless Buyers Making Deal-Killer Mistakes"

New Program FHASecure to Help Borrowers Caught Up in Mortgage Crisis

Some good news came today--new FHA program, FHASecure, to help homeowners who are in the throes of delinquency that resulted from the current mortgage crisis:

"The FHASecure plan is designed to prevent foreclosures among homeowners who fell behind because the rates went up on their adjustable-rate mortgages. About 60,000 "delinquent-yet-creditworthy" mortgage borrowers will be able to refinance into FHA-insured home loans in the next year or so, an official with the Federal Housing Administration says."

(Source: Bankrate.com)

Basic things to know about the new FHASecure program:

1. The program is available only to borrowers who made all their payments on time during the six months before the ARM rate was adjusted upward. The definitition of "on time," according to FHA guidelines is less than 30 days late.

2. According to the article, "Borrowers can get FHASecure loans even if they are up to six months behind on the payments on their non-FHA ARMs. But borrowers have to prove that they fell behind because of the rate reset and not for another reason, such as a job layoff."

3. FHA has maximum loan limits, which can be found here: FHA Loan Limit Finder

Read full article for more information about FHASecure.

Virtual Buyer Agent Not Telling the Whole Story

There are many new business models popping up in the real estate industry. Some that are very consumer focused, and others that only try to be, but do not fully understand the scope of what a Realtor is supposed to do—specifically a Realtor who specializes in buyer agency, and more specifically a Realtor who specializes in exclusive buyer agency. It’s called advocacy.

Advocacy means that a professional takes the time to understand what their buyers are looking for, they preview properties to help buyers save time, they look for red flags, and they are supposed to recommend various inspections based on the red flags that they observe. Red flags that may not have been picked up by the buyer—had they gone by themselves. Buyers need to understand that they can negotiate rebates with any buyer’s agent, but sacrificing advocacy is a big mistake.

One particular virtual real estate company on the web entices buyers with a 75% rebate offer—spreading inaccuracies, as another well-known discount broker has done recently. For example, they say that buyers cannot look at properties on their own when they go with a traditional Realtor, or inadvertently, with a Realtor who exclusively serves buyers only. This is not true. Buyers can arrange and coordinate with their agent on how they should go about looking at properties on their own. The company claims that its’ agents do not depend on commission, and therefore, not influenced by commission. However, the company itself—which is the broker—does depend on commissions. How else can their business survive?

While the inaccuracies are plentiful, the major drawback of this company is that they do not preview properties and attend showings. Therefore, they cannot point out red flags that can go unnoticed if not picked up by a general inspection. They do not offer buyer advocacy, but rather, send buyers off to fend for themselves with minimal service. Perceived savings can become diluted if something is missed, goes wrong, and a lawsuit results. A buyer’s advocate will point out red flags and recommend various types of inspections to further investigate potential problems. A buyer's advocate will assist buyers at every step. Sometimes, a property will require more than a general property inspection, and these specialized reports are beyond the scope of a general property inspection—for example, geotechnical reports, and reports from structural engineers. If an agent does not go to the property, they cannot spot red flags. If they cannot spot red flags, they cannot recommend further investigation.


“A red flag can be anything that alerts you to a potential problem or that just doesn’t seem right…Noting red flags in a transaction may result in the buyer’s request for repairs, but it is far better than overlooking them, which can leave the buyer and seller vulnerable to a lawsuit, as well as the real estate agents, their brokers, and the general property inspectors.” (Nichols p.17)

Barbara Nichols, “The No-Lawsuit Guide to Real Estate Transactions”

Bottom line—there is much more to real estate than searching for properties on the Internet. The Internet is a wonderful time-saving tool for buyers and sellers alike, but it is most powerful when used in conjunction with the full services of a real estate advocate.

Inform and empower yourselves, but have an advocate on your side at every step of the way. Unless you are a seasoned real estate buyer, a self-service real estate option can be risky. If you would like to have a rebate…negotiate for it--if it's legal in your area--but don’t sacrifice the advocacy you would not otherwise receive from a self-service business model.

Good Information: The Art of the Aggressive Offer

This is a very interesting article by Amy Hoak of MarketWatch.com about negotiation strategies in a buyer's market:

"CHICAGO (MarketWatch) -- Home sellers are not automatically turning up their noses at offers that come in far below their asking price these days as prices stagnate and the inventory of homes for sale remains elevated in many markets" (Hoak)

Read Amy Hoak's full article here.

Good Blog: Fuzzy Distinction, but Clear Conflict of Interest

A good Blog to read:

"In May, 2004, I began interviewing real estate agents to assist me in purchasing my first home. I interviewed Julie Tuggle, an exclusive buyer's agent, and two other real estate agents (who represented both buyers and sellers). During each interview I asked the agent what they would do if I liked one of the homes that they were listing. I was shocked when the two dual agents replied that they would be able to represent both sides. I am an attorney (licensed in Florida) and I could not fathom how this was not a blatant conflict of interest."

Read entire Blog: "Fuzzy Distinction, but Clear Conflict of Interest."

Readers Respond: June Fletcher Tells it Like it Is!

In a recent article entitled, “Readers Respond: Using A Buyers Agent,” June Fletcher, a staff reporter at The Wall Street Journal, the author of "House Poor" (Harper Collins, 2005), and columnist for “House Talk," set a few misconceptions straight about what an exclusive buyer's agent can do for their buyer clients.

When a Poulsbo, WA agent said, “If you never negotiate from the sellers agent perspective, you are less prepared to position negotiations effectively with sellers in service to your buyer….many [clients] can't buy until they sell. You're suggesting not to use one agent for both?” June answered, point blank, “Well, yes I am -- if you can find an agent who specializes in working just with buyers. The idea that exclusive buyers agents can't understand a seller's perspective is hogwash…”

Cite Source: RealEstateJournal.com

Kudos to June for setting things straight, and telling it like it is. The idea that an exclusive buyer's agent cannot possibly understand the seller’s perspective is untrue. As a matter of fact, they can offer home-selling guidance as a value-added bonus to buyer-clients who prefer to sell on their own--but it needs to be said that, as sellers, they would benefit from the experience of a good listing agent.

Listing agents and companies who dedicate themselves to the seller can bring advocacy to the table for the seller, which is invaluable. The same principle applies to exclusive buyer agents and their companies; they provide advocacy for the buyer, because they only represent buyers. The key is avoiding dual agency.

An exclusive buyer's agent can offer guidance without actually taking the listing--and therefore--without charging any fees. Some exclusive buyer agents may offer this guidance to loyal clientele, and again, it is only guidance--not advocacy. Most agents will frown upon this practice, and many would regard it as, “leaving money on the table.” However, an exclusive buyer agent could do this as an added value to their buyer-clients.

For buyer-clients who prefer to sell using the services of a listing agent (recommended), an exclusive buyer’s agent can refer them to the best listing professionals in the market. They can do this because they are in constant contact with them at networking events, real estate classes, and during the course of everyday business. The best listing agents are those forward-thinking professionals who understand and respect the new consumer-driven economy. They are not threatened by the change, and in fact, welcome it because they know that consumers will benefit greatly. They realize that when consumers are happy, trust is sure to grow, and when trust grows, the public's general perception of real estate agents will also improve. Everyone wins.

Bottom line, real estate is not a cut-and-dry world anymore. There are many more options available, and Old-school real estate agents need to update their out-moded ways of thinking. It is now more consumer-driven than ever before, and it is now up to consumers to educate themselves on the options available to them, and to decide for themselves how they want to be represented. A growing number of them are learning about the many options that were never available to them before.

An Interesting Discussion: Garbage In, Garbage Out - Getting the Best from an Agent

Every once in a while, a Blog pops up that really hits on some interesting points. This particular Blog entitled, "Garbage In, Garbage Out - Getting the Best from an Agent," Jessica Beganski, a Realtor and an exclusive buyer's agent from South Windsor Connecticut, discusses two common buyer perceptions and misconceptions that she has observed in her experience. This Blog is interesting because Jessica captures the core of how buyers can get the most out of working with an exclusive buyer’s agent:

From Jessica’s Blog:

“A buyer’s agent will not run out to the property because you are not our client (yet) and we haven’t even met you. I am my own product - I sell my services not the house you’re buying."

"So, if you want top notch service and a great house, think about how you are perceived by the agents you contact when looking for a house.”

Cite Source: Real Estate in Connecticut

Good Information: How to Shop for a Mortgage Today

A recent article in Kiplinger’s Personal Finance magazine entitled, “How to Shop for a Mortgage Today,” by Pat Mertz Esswein, discusses the new lending environment in the mortgage market. In general, it touched on the major changes that will be affecting homebuyers. However, one specific point stood out that illustrates the importance of an improved credit score, as well as, the impact on monthly payments:

Is it worth waiting to buy until I can improve my credit score?

“Probably. The average rate on a 30-year fixed-rate mortgage is typically at least 1.5 percentage points lower for someone with a credit score of 760 to 850 than for someone with a score of 620 to 639. On a $216,000 loan, a borrower with a top-tier score would pay $232 less per month -- a saving of $2,784 per year -- than a borrower near the bottom, according to MyFICO.com.”

Cite Source: Klipinger.com

One Bad Apple Don't Spoil the Whole Bunch

An interesting Blog came up yesterday regarding a letter from a buyer seeking advice. The advice sought was in regards to the questionable policies of an exclusive buyer's agent they claimed was found through NAEBA--which is quoted below:

"1. He stated that his commission was 4% of the total price of the house. 3% of which must be paid by the seller agent and 1% by me. And the combined should be a minimum of $10,400 (if the 3+1% of the home price doesn't come upto 10,400, I have to pay whatever is remaining). Is this the norm? Or is he asking too much?

2. He also stated that he will show only a maximum of 25 houses excluding open houses that we attend on our own. His point was that people usually choose from 10-15 houses that they see. If we do not find a suitable one within the first 25, the Retainer fee of $1,500 will have to be forfeited. Is this reasonable?I appreciate your input towards these questions. Once again, thank you very much!"

Source: ThinkGlink.com

While this is certainly alarming, this in no way reflects the policies of all exclusive buyer agents. These are the questionable policies of only one person. As with everything else in life, there is good and there is also bad. This is a universal truth that applies to services in all industries. This is why it is important to open the lines of communication, so that policies can be discussed upfront and negotiated, if necessary.

United We Stand, Divided We Fall: Buyer Agency and the Fragmented World of Real Estate

In a recent Accredited Buyer Representative class, it came as no surprise that out of approximately 36 attendees, there was only one exclusive buyer’s broker in attendance. Although most of the information presented in the class was informative, insightful, and the content was well-delivered, it was alarming when two Realtors announced to the class--on two separate occasions--the “old saying” that “buyers are liars.” The first thought that came to mind was, “why?” If these Realtors really believe that buyers are “liars,” then why are they even in this class to begin with? Unfortunately, with the exception of a very small few, this is a pervasive belief among traditional agents and brokers—a belief not shared by those who have chosen to serve buyers only.

This was a three-day class, and each day was eight hours in length. It was just enough time to experience the “niceties” of certain traditional Realtors, who demonstrated their narrow-minded worldviews, values, and norms. Some had behaved abrasively, as well as, condescending. They revealed their own prejudice beliefs, as many before have done in the past, that unless one is part of the herd, they do not deserve any professional courtesy.

It was an eye-opener to see the friendly expressions of certain Realtors suddenly change into seething animosity, when told of the decision to represent buyers only. You would have thought a mortal sin had been committed. The consumer value of having the option to avoid dual agency completely did not compute within the minds of these people.

Some traditional agents have gone as far as to say that dual agency is not even an issue, as long as consumers liked them. However, it is an issue when the dual agent cannot negotiate for either side; or when a dual agent company has to remain neutral in the midst of a transactional conflict. What are dual agents being paid for, if they cannot provide the valuable service of negotiation, and if they cannot provide advocacy for neither side?

Now we turn our attention to the culture of exclusive buyer agency. This culture is small, but growing—struggling for recognition and acceptance by Realtor associations that normally favor traditional real estate brokerages. The associations they struggle with do little to educate the public about the option of exclusive buyer agency. Furthermore, they add to the confusion by blurring the real meaning of this agency option. For example—the Washington Association of Realtors has a standard pre-printed form called an “Exclusive Buyer Agency Agreement,” yet there is a clause within this form that gives the option to consent to dual agency. If an agreement is truly for exclusive buyer agency, then dual agency should not even be a part of it, because dual agency is a non-issue where this agency option is concerned.

Honestly, a buyer agency agreement becomes exclusive only when the option of dual agency has been removed--otherwise, it is just a buyer agency agreement.

Delving further into the world of exclusive buyer agency, we see a rift within the fragment. This culture is centered on an association that has let former members down in the past. This association is NAEBA. Instead of unity and camaraderie, there were arms-length adversarial attitudes within the group, and no support—as promised in their membership literature. When an exclusive buyer agent breaks away from the disappointing experience, they are then discredited for not belonging to the organization anymore. For example—in a recent Blog—an exclusive buyer’s broker touted the news of an article he claimed was recommending that buyers only work with exclusive buyer agents who are members of NAEBA. However, upon review, it was realized that the article only mentioned that buyers can find an exclusive buyer’s agent through NAEBA. The article made no specific endorsement advocating the sole use of NAEBA members.

It needs to be said that not all professional exclusive buyer agents are NAEBA members, mostly for the reasons already mentioned above.

The final fragment we will explore in the real estate industry is the culture of the discount brokers. Like the exclusive buyer agents, they are new to the industry, and they have also drawn the ire of the industry for going against the traditional ways of doing business. However, they have taken an adversarial position against all Realtors, including buyer agents, and inadvertently exclusive buyer agents. They have unfairly shrouded the entire industry under a cloak of suspicion—leading many consumers to believe that they are the only credible option available. Because certain discount brokers have ties to the media—which is notorious for delivering biased information—they are able to spread their inaccuracies nationwide. They profess that consumers are victimized by the industry, yet they fail to take into consideration that not all real estate professionals are alike. They are content to make sweeping generalizations about matters they are not fully informed on. Certain discount brokers contradict themselves by claiming that they do not practice dual representation (dual agency), yet if a buyer purchases a property through them, and the property is listed with their company, this is dual representation on the part of the company.

Bottom line:

The real estate industry is about serving the best interests of our clients, period. It is not about our egos. It is not about our “net gross sales last year,” nor is it about out-selling “Sally Sells-A-Lot” next door. It is not about spreading deceitful propaganda and half-truths to induce consumer action, and it is not about suppressing valuable agency options—nor alienating the practitioners that choose to make these agency options available. It is only about the welfare of consumers, respecting their right to be represented, and respecting their freedom to choose how they want to be represented. They have a right to full disclosure as to what their agency options are, because without full disclosure, they cannot make fully informed decisions on matters that can materially affect them.

Food for thought:

Will the real estate industry ever gather and reconcile its fragments for the sake of consumer welfare? Will real estate professionals ever learn to respect each other, and the diverse cultures that have evolved within the industry? Will old-school Realtors ever learn to understand that these diverse cultures are no less deserving of professional courtesy and mutual respect? Will certain discount brokers ever stop spreading inaccurate propaganda and half-truths to induce consumer behavior? Time will surely tell.

Positive change in the real estate industry will require integrity, diplomacy, transparency, tolerance, mutual respect, and understanding. Until we have these ingredients, we cannot fully serve the best interests of consumers, nor can we become a united industry.

The Mortgage Meltdown, and What it Means for Homebuyers

We live in chaotic times, and now with foreclosures on the rise, this chaos has extended itself to the mortgage market. The impact of this has caused mortgage investors to lose confidence, which has reduced the amount of cash available for new loans. A recent news piece by the Associated Press reported that, “The shocks to the industry are siphoning lenders and cash away from the market, which reduces competition and restricts people’s access to home loans.”

With the loss of available cash for new loans, lenders have tightened their lending requirements, and some lenders have been forced to go out of business—filing for bankruptcy. According to an article by RISMEDIA entitled Mortgage Mayhem, the reason for the fiasco in the mortgage market, “…is largely based on the fact that market conditions in both the secondary mortgage market and the national real estate market have deteriorated to the point that many mortgage businesses are no longer viable or as profitable as before.”


So what does this mean for homebuyers?

It means that it is now more difficult for buyers with less-than-perfect credit to qualify for a mortgage. The Associated Press had quoted George Hanzimanolis, president of the National Association of Mortgage Brokers , “lenders have raised the minimum credit score that qualifies for financing. Most lenders now require bigger down payments, he said, and are eliminating exotic loans or making them more difficult to qualify for.” He mentioned, “The silver lining is that people with good credit who can document their income have the same access to home loans as they did a year ago.”

First time homebuyers will have a tougher time buying their first home, but hope is not completely lost. The condition in the mortgage market now requires first-timers to do a little more planning, and more saving for the future. Buying a home is not only one of the biggest financial investments of a person’s life, but it is also one of the biggest responsibilities. It is worth taking the extra time to plan and wait—making sure that all financial considerations are in order, saving enough money for a larger down payment—with some savings left over—and making sure that credit scores are brought up to justify a lower interest rate.

If a buyer's income is good, but for whatever reason, they cannot qualify for a mortgage, then there is the option of lease-to-own. This is a good way for buyers to be in a home, while improving their situation to qualify for a mortgage in the future. Considering the current condition in the mortgage market, more sellers might be willing to entertain such an arrangement if buyers can demonstrate that they have a steady job situation, and they can support the monthly lease payments.

Buyers will benefit in the long-run from the stability that results with making smart financial decisions. Timing is everything, and this principle certainly applies to buying real estate.

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!

Buyer Agency and Fiduciary Duties: No Nonsense Here

In a recent blog, I read one person's argument stating that: "fiduciary duties and buyer agency cannot co-exist based on the current method of compensation."

While I can appreciate that this person is expressing his views, I have to say that I totally disagree with this idea, because--as I pointed out to this person--not all real estate agents are the same. Not all will share the same worldviews, values, and norms.

Although Washington state may not require real estate agents to provide fiduciary duties, it does not mean that they cannot, or should not, provide such duties. His blog was based on the quote of a local Realtor--found in a story by the Seattle Times called, "Agent commissions inching upward," that said:

“In a market flooded with unsold listings, she says, a 3 percent co-op split 'is always going to attract more attention than 2 percent. We call [inadequate splits] ‘getting eliminated at the office.'”

My response:

"This is only one agent’s perception–and there may be others that share this view, but this person does not speak for all agents, or brokers. She certainly does not speak for me. I am an Exclusive Buyer’s Broker, and my only concern is showing properties according to what my clients need, and what they can afford. I earnestly make it a point to maintain fiduciary duties with my buyer clients–and because of this–I don’t take listings.

It is not right, nor is it fair, to make sweeping generalizations about buyer agents, because it is a fact that not all real estate agents–let alone buyer agents–operate in the same way, nor do they all maintain the same values."

The Six Essentials of Qualifying for FHA Loans

While FHA is a very helpful program designed to help Americans achieve homeownership, there are a few helpful things to know about what it takes to qualify for this type of financing. The six main points of pre-qualifying for this type of mortgage program--as described by fha.com--include, as a rule of thumb:

1. Steady employment history, at least two years with the same employer.

2. Consistent or increasing income over the past two years.

3. Credit report should be in good standing with less than two thirty day late payments in the past two years.

4. Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.

5. Any foreclosure must be at least three years old with good credit for the past three years.

6. Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.

For more information about FHA mortgages, and other helpful homebuying tips, please visit the official web site of the U.S. Department of Housing and Urban Development (HUD). FHA can help buyers whether they are first time homebuyers, or they are buyers who would like to buy and renovate a fixer. FHA also has a reverse mortgage program for seniors, as well as, programs for buyers of manufactured homes. Information about these different programs can be found by visiting HUD's loan program page.

Basic eligibility requirements for an FHA mortgage can be found through their knowledge base.

Tighter Lending Rules Keep Some Buyers Out

In response to the current situation in the mortgage market, where foreclosure rates are at an all time high, lenders across the board are tightening up their lending requirements, making it more difficult for buyers to qualify for a mortgage.

Gone are the days of 100% loan-to-value mortgages. While some may see this as a barrier to homeownership, it is actually a blessing, because nothing is more financially devastating than a foreclosure on one's credit history. According to Carolyn Said of the San Francisco Chronicle, who interviewed a number of larger lenders, explained that the new standards fall into the following areas:

"Ability to repay. Buyers are no longer being qualified at the low initial rate. They must qualify for the loan payments at rates equal to what the loan would be if it reset at a higher rate."

"Down payment. Lenders want buyers to put some money down, even as little as 5 percent or 10 percent. Loans for 100 percent of the price are very hard to get."

"Credit score. Credit scores range from the high 300s to the low 800s. Borrowers with a credit score above 680 are likely to qualify for a reasonable deal. Between 660 and 680, they may qualify, but the deal could be pricey. Potential borrowers with a score of 620 or less need to raise their scores before they can qualify."

"Income and income verification. Producing proof that a borrower has a job is key; “stated income” loans are much more difficult to get. Also lenders are unlikely to approve a loan in which the home buyer will spend more than 45 percent of his gross income paying off debt, including paying the mortgage."

Cite Source from Realtor Magazine,click here.

While these changes may delay homebuying plans for some buyers, this is actually a blessing in disguise--because these new standards will cause buyers to improve their financial situation before taking on the huge financial burden of taking of a mortgage. It will also benefit buyers in the long term, because these new standards will ensure that they stay on path to a healthy financial future. For buyers who are financially capable of maintaining mortgage payments, but who do not qualify due to credit scores, there are still alternatives available such as lease-to-own.

However, buyers need to keep in mind that a mortgage will come into the picture, at some point in the future. Therefore, buyers who choose this route should plan to financially position themselves during the lease period in order to qualify for a mortgage when the lease period is up. Buyers should also have a decent down payment--at least 10% of the purchase price--to demonstrate financial capability to sellers who would consider lease-to-own arrangements.

Bottom line...

While it is now tougher to qualify for a new mortgage, the path to homeownership is not dead in the water. It just takes more long-term planning and financial considerations on the part of buyers, which will only help to benefit them over the years. It is well worth the peace of mind that buyers will have--knowing that they have made the right moves to make sure they can stay in their homes, and stay on the right path to a secure financial future.

Why Buyers Do Not Pay Commissions on Listed Properties

A real estate company is misinforming the public by saying that buyers actually pay for real estate commissions on listed properties. According to information on their web site, "the buyer is the only person bringing a checkbook to the closing, and both commissions come out of the money the buyer provides."

While it is true that buyer's bring the money to the table, the seller's costs of sale are not the buyer's expense or responsibility. If buyers actually paid commissions, they would be paying the purchase price PLUS sales commission. However, this is not the case with listed properties.

The truth is that commissions on listed properties are actually deducted from the seller's side of the closing statement--not the buyer's side.

This means that the seller receives the purchase price first, and then his or her costs of sale are simultaneously deducted to result in net sale proceeds. The notion that buyers pay commissions on listed properties makes about as much sense as employers paying for their employee's income tax deductions. For example--an employee's paycheck--he or she must receive his or her pay first (aka. gross pay) before taxes are simultaneously deducted to result in the employee's net pay.

Likewise, buyers do not pay the seller's costs of sale on listed properties, because these costs are deducted from the seller's gross sale proceeds, which gives them their final net sale proceeds.

It needs to be said that inciting consumer bitterness with skewed information is wrong. It is better to bring about positive changes in the real estate industry without distorting the truth. Buyers can save money by negotiating buyer rebates with agents or brokers in states where it is allowed. It is not proprietary to the company mentioned in this news story.

In Response to 60 Minutes Story

The following was in response to a story done by a reporter for 60 Minutes entitled "Chipping Away at Realtor's Six Percent.". Many comments posted in response to this story were from misinformed people who made unfair sweeping generalizations against all real estate professionals.

*****Posted Comment Begins*****

In Washington State, commissions are negotiable. It is illegal to set commission rates. I am sure that this is the case in all 50 states, since this is a form of price-fixing--an antitrust violation. If sellers want to lower commission rates, then they need to speak up and negotiate it down. If listing agents "don't allow" less than 6%, then THOSE listing agents need to be reported. However, to say that all real estate agents and brokers are bad is, not only ridiculous, but it is also a sweeping generalization that is unfair to those who are honest, good, and who work very hard for the clients they serve.

As far as rebating buyers, some states don't allow this. However, in the states where it is allowed, a buyer can negotiate a rebate with ANY exclusive buyer's agent--or any real estate agent, for that matter. Exclusive buyer agents, however, only work for buyers. They are non-traditional, as discount brokers are, and their priority is to get their clients the lowest price possible on the properties they buy.
Exclusive buyer agents are truly pro-consumer. They don't take listings, and neither do the companies they work for, so there is never a chance of dual agency--which is a conflict of interest.

Dual agency is a conflict of interest, because a seller expects their agent (and their agent's company) to get the highest price possible for their property, while a buyer expects their agent (and their agent's company) to help them negotiate the lowest price possible.

When there are two agents working for the same real estate company, and they are working on opposite sides of each other in the same transaction--these commitments are conflicting. This is dual agency, or "dual representation," on the part of the company.
Dual agents are required to remain neutral to both parties, meaning, that neither buyer nor seller receive the level of service they originally expected, and signed-up for. However, with Dual Agency, the real estate company makes double commissions. It is a long-standing practice in the real estate industry called "double-dipping."

The company being interviewed in this news story has contradicted itself by claiming that they do not allow dual representation (as stated on their web site), yet they take listings--so if a buyer wants to make an offer through them, on a home listed with their company--this is dual representation (aka. dual agency) on the part of the company. A dual agent will make money from both sides of the same transaction, while remaining neutral to both sides. Who is really benefitting here?

Buyers can completely avoid dual agency by hiring an Exclusive Buyer's Agent or broker, because they do not take listings--and neither do the companies they work for. They will also work very hard to save their clients money, because a satisfied client means the possibility of a long-term business relationship.