Bethesda Gazette
 
BETHESDA REAL ESTATE FIRM GIVES HOME BUYERS AN EDGE
by Myra Mensh Patner
 
When Liz Hall decided to buy a house in Bethesda, she did not go to one of the area's big-name real estate companies. On the recommendation of her brother, she called Stephen Israel, founder of The Buyer's Edge - a Bethesda real estate company that exclusively represents home buyers and does not list sellers' homes.

Hall told Israel what she could afford, looked at houses with him beginning in November and last week settled on a three- bedroom, red-brick colonial house in the Bradmoor neighborhood. Hall would not disclose the price but said it is about $30,000 less than a bid in a contract that fell through six months ago. "We got a great deal. Steve had only my interest to think about. During the contract negotiations, there was no one trying to watch out for the seller and not for me," said Hall, a teacher. Israel launched the Buyer's Edge at 4919 Hampden Lane four years ago, and became an early player in a small but growing niche of exclusive buyer-brokers. The buyer-brokers claim that home buyers get short shrift when they hire realty companies that sometimes represent buyers and sellers simultaneously. "If a company represents both sides of a transaction, who wins? The incentive is to favor the seller so the agent gets a higher commission. You can't serve two masters. It's illegal for other industries to do that. Law firms can't do that, why should realty companies?" asked Israel, 41, who grew up in Bethesda and graduated from Walt Whitman High School. In a telephone interview, Bill Stuart, manager of Pardoe Real Estate, Inc., on Wisconsin Avenue in Bethesda, defended the practice of his company and others that employ agents who, at times, represent both the buyer and seller. "Neither party is compromised. The fact that it's the same company typically doesn't have any practical impact. Nothing is said or done that would compromise the buyer's interests," said Stuart. But Stuart did say that he believed buyers who did not specifically arrange to have their own agent representing them make a mistake. "In general, a buyer is better served by having his own representation," said Stuart, a realtor for 23 years. Israel said his company's exclusive buyer-broker approach saves buyers money. He said his clients saved an average of 8 percent off the list price of the approximately $18 million in sales the Buyer's Edge handled last year. While most real estate agents make money on commissions, Israel's customers may pay by the hour or by setting a flat fee, often less than the usual agent's fee of 6 percent. Israel, who has a business degree from the University of Maryland, maintains that with this system, the agent has the same incentive to sell a lower priced house as a higher priced house. Customers can also choose to pay Israel on an hourly basis. That's what Jackie Confrey did just a few weeks ago when she bought a house in Olney. She paid Israel $200 an hour, then bought her house for $20,000 below the list price. Confrey said she ended up saving an additional $4,000 on the commission when the purchase closed. "Steve helped to get the price down for us and we saved money," Confrey told the Gazette. Confrey paid a total of about $3,200 in hourly fees. In addition, Israel says his firm does not accept so-called "bonus" commissions. Sellers sometimes offer bonuses in an attempt to get agents to show certain houses ahead of others. But Israel said that when he sells a house with a bonus commission, that bonus is credited to the client. Realty agents were initially resistant when exclusive buyer- brokers came on the market, said Forrest Pafenberg, economist in the Washington office of the National Association of Realtors. "They were uncertain about what was legal and what was illegal," said Pafenberg. The issue was clarified when consumer groups led by Ralph Nader, as well as some realty groups, successfully pressed many states to pass laws requiring that real estate agents who represent both buyers and sellers disclose that fact to customers, Pafenberg said. In addition, the National Association of Realtors now requires its 720,000 members to disclose who they represent in a real estate transaction, Pafenberg said. In fact, most realty companies still represent both buyers and sellers according to a recent poll by the National Association of Realtors, which found that 70 percent of those polled represented buyers and sellers. Only about 2 percent represented buyers exclusively, Pafenberg said.

Israel's wife, Wendy Carpenter-Israel, is also a realtor. She is with W.C. &; A.N. Miller, which uses the traditional commission. She has been at Miller for the past eight years but eventually plans to work at the Buyer's Edge. Israel has 10 agents in his company. Business has grown in the past four years, from handling the sale of about 15 houses to about 60 this past year.