Guest Blogger - Richard S. Sloan
Last September, Steve Israel and I spent two days touring houses ... along the Coast of Maine. We had walked through hundreds of homes together over the last two decades and he had helped our family purchase three properties. But this was different. Steve was tagging along as a trusted family friend and not a buyer broker. I had already signed an “Exclusive Buyer Representation Agreement” with a local realtor. And that individual had been incredibly helpful setting up appointments to see properties, researching public tax records and prior sales in the area.
Strikingly, that agreement said that the agent owed “the client, fiduciary duties, which include among other things, the obligation not to reveal confidential information obtained from you.” It went on to discuss what happens when a “Disclosed Dual Agency” arises. How a fiduciary duty to a client squares with a dual agency where the agent “represents two clients, the Buyer and the Seller, whose interests are adverse” was never fully explained. But the agreement did limit disclosure — obviously a good thing — when it came to pricing, offers, negotiating strategy or the motivation of either party. Even so, I rejected the option of having a disclosed dual agency.
From experience, I knew the pitfalls of a real estate firm or realtor representing both the Buyer and Seller. There are always inherent conflicts of interest between the parties — how much money exchanges hands and what terms are more beneficial to the seller than the buyer. The unwary buyer often ends up negotiating against himself or herself. And, for the real estate firm or its agents, making the deal happen becomes paramount. That clear fiduciary duty, well, it often becomes opaque. And that process can begin long before an offer is made or negotiations start.
What amazed me was how slowly and subtly that fiduciary duty becomes opaque. At the first house, we found insulation stuffed between its deck supports and the rocky terrain below. My local agent argued that lots of old houses used that fix and it didn’t hold moisture — an assertion that, in my mind and Steve Israel’s experience, just didn’t hold water.
But a flue at another property certainly did. Obvious signs of corrosion were passed off by the agent as inconsequential. Really? Such corrosion could signal carbon monoxide accumulating in the chimney. To a potential buyer that seemed like a huge health risk. An unevenly painted ceiling and, later, a slightly warped floor produced debates about possible water damage which the local agent resolved in favor of the owners. Finally, our discussion turned to the amount of asbestos content in roofing shingles, shingles that would have to be replaced sooner rather than later due to the beating they had taken over the decades from Nor’easters.
I get it. Winters are harsh along the Coast of Maine. Water — in the form of rain, snow, sleet, ice and even wave action — is a constant threat to homes in the region. But what I don’t get is how a fiduciary duty to the buyer becomes a duty to defend the seller’s property at every turn. Fortunately, I had Steve Israel to return clarity to what had gone well beyond opacity into downright cloudy.
Steve debriefed me after every house. He talked about the minor fixes needed, the major projects that might be required, and the problems that demanded a deeper investigation. We worked room-by-room discussing the pluses and minuses — from windows to washing machines, from wood stoves to cookstoves, from heating systems to solar systems, from water purification to water damage. His knowledge was encyclopedic. But, to me, what mattered most
was his philosophy as a buyer broker: he only had one client, never two. And that fiduciary duty? Well, that duty and Steve’s approach was defined by Benjamin Cardozo almost a century ago:
Many forms of conduct permissible in a workaday world for those acting at arm's length are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the marketplace. Not honesty alone but the punctilio of an honor the most sensitive is then the standard of behavior.
It has, as Judge Cardozo went on to say, “been kept at a level higher than that trodden by the crowd.” That higher level is what sets Steve Israel and Buyer’s Edge apart.
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