Gazette
 
NEW BROKERAGE IS FOR BUYERS ONLY
by Jo Beck
 
Steve Israel, a Bethesda native, recently opened a new "buyer broker" real estate firm called The Buyer's Edge. Israel has been active in local real estate and construction industries since 1978.

Part of a new trend in the real estate industry, buyer broker firms exclusively represent purchasers in real estate transactions. "Since we don't accept listings, we never have a conflict of interest," said Israel, pointing out a major difference between his firm and a traditional real estate company. The company is a member of the Montgomery County Association of Realtors, the D.C. Board of Realtors, the Maryland Association of Realtors and the National Association of Realtors. The Buyer's Edge currently has 7 full time agents. "We've gotten a fantastic response from the public," said Israel. "There are a bunch of companies like ours springing up . . . it's very popular, especially in the western and southern states." The National Association of Realtors recently mandated that local real estate boards change their forms and contracts to recognize buyer brokers and buyer broker agencies. "We've noticed an increase, too, in the number of people who call to inquire about buyer broker referrals," said Brenda Stevens, public relations spokesperson at the Montgomery County board. Like a client of a traditional real estate firm, buyer broker clients pay no fee for the services of Israel's firm, and the seller pays no additional fee other than the usual percentage of the selling price. If the buyer broker agent finds a buyer for a property, he or she takes the selling agent's percentage of the selling price. Israel feels that many problems can be avoided by the use of buyer broker firms. He gave an example of a recent transaction that was almost to the settlement table when the property survey revealed that a garage on the lot had been built several feet over the lot line. In a traditional situation the seller's agent and purchaser's agent would have been duty-bound to find the best solution for the seller, since in actuality they both work for the seller. But in this case, as representatives of the purchaser, we were able to work with the seller and got a substantial settlement," noted Israel. "Since we only represent the client, we can note the pros and cons of a property," said Israel. "Traditional agents have an obligation not to say negative things about a neighborhood," for example, noted Israel. Buyers may not notice flaws in a home or negative environmental factors in a given neighborhood, and a buyer broker would be obligated to point these out to the buyer. A hypothetical situation cited by Israel is when a buyer of a house discovers on the first Monday after settlement that what he thought was a country road is actually a state highway with high truck traffic. In a buyer broker situation, said Israel, buyers have a lot more leverage when it comes to recourse. "In a traditional real estate transaction, bargaining power is always tipped in favor of the seller," noted Israel, pointing out that information in a buyer's financial disclosure statement must be available to the seller's agent, and so in many cases the seller knows exactly how much the buyer can afford to pay for the property. It's a little like knowing which cards your opponents are holding in a game of poker, he said. Israel's firm asks buyers to pre-quality with a lending institution, and a buyer broker only discloses to sellers the fact that the buyer is qualified. Larry Cohen, a Bethesda attorney and real estate broker is a recent client of Israel's company. He echoed Israel's opinion on the bargaining advantage of buyer brokers. "It's the biggest investment you'll ever make. If you push for the best deal, you're better off with a buyer broker. We feel that they're really watching out for our best interests," said Cohen, who added that a buyer broker would be an ally rather than an adversary if problems arise during negotiation and settlement.

"The thing to remember is that the best deal for the buyer may not be the best deal for the seller that's where the conflict comes in," noted Cohen. "If push comes to shove, who is going to be represented?" For additional information, call 301-657-1475.