Crafting Win-Win Solutions for Real Estate Disputes

Negotiation is part of the job description for real estate agents, who are often proud of their ability to strike a deal. Consequently, when an issue in a transaction develops into a full-fledged dispute, REALTORS® are often reluctant to turn to a third party for help. If I can’t get to a solution, the thinking goes, there just isn’t one.

But when you are personally involved in a dispute, you are less able to see the way to a solution. “Where emotion is high, logic is low,” says Bruna Pedrini, a mediation trainer and attorney with Fennemore Craig in Phoenix. Even highly trained mediators have trouble using their skills during a family disagreement.

If you find yourself embroiled in a dispute and consensus seems impossible, AAR’s mediation programs can help.

What Is Mediation?

Mediation gives parties involved in a dispute the opportunity to sit down together with a neutral third-party mediator and attempt to find a mutually agreeable solution. Mediation is a voluntary, confidential process. Its aim is to provide a win-win agreement in far less time and with less resources expended than in an ethics hearing, arbitration or court case. If mediation fails, the other options are still available.

Why Mediate?

“During mediation, you have a say in the outcome,” explains Evan Fuchs, ABR, CRS, GRI, an AAR mediator and the designated broker at Bullhead Laughlin Realty in Bullhead City. “You may not get exactly what you want, but you can reach a win-win deal that’ll stick.” In an arbitration, on the other hand, the hearing panel makes the final decision in favor of one party.

“With panels, you’re giving control of the situation to a bunch of strangers,” agrees Carol Anne Warren, ABR, GRI, an AAR mediator and associate broker with Arizona Adobe Group Realty in Cottonwood. “With mediation, you’re in control.”

Mediation is a strong alternative to legal action as well. “Mediation keeps you out of the courtroom and saves you money,” says Fuchs.

“If you can’t successfully mediate and move to a jurisdiction outside of the association, you are allowing lawyers and judges who never really quite understand what we do and how we do it to make a lot of money and waste a lot of time,” asserts Gary Best, ABR, CCIM, an AAR mediator with Keller Williams Southern Arizona in Tucson.

“AAR mediations have a very high success rate,” reports AAR Risk Management Specialist Jan Steward. “Through the third quarter of 2011, our success rate was 83.3%.” Of course, if mediation fails, the other options for resolving the dispute are still available to you. In fact, material from the mediation is confidential, so it will not affect a future arbitration or court case.

What Are the Barriers to Mediation?

A big barrier to mediation is stubbornness, says Fuchs. “You have to get the parties involved to understand that there might be another option besides their way.” The reluctance can also come from an unwillingness to admit error or a desire to “nail” the other guy. “Mediation sounds like it won’t be quite so painful,” says Warren with a smile.

“Occasionally one of the parties is so passionate and so single-minded in their desire to win and dominate at any cost that they prevent the mediation from succeeding,” notes Best, who remembers calling off a mediation to the surprise of the intractable complainant. If one or both parties won’t compromise, the mediation won’t succeed.

Who Are the Mediators?

In AAR ethics and business dispute mediations, the mediators are REALTOR® volunteers who are trained to listen, encourage open communication between the parties and help them resolve their issues. Different mediators have different styles, but they all have the same goal: a resolution to the dispute.

Warren nurtures the parties and the process through telephone calls the day before the mediation. “I handle any questions or concerns they may have about the process beforehand,” she explains. “I calm them down and let them know that it’s not going to get adversarial. No one is going to yell. They walk in knowing it’s not going to be ugly.”

George Watrous, ABR, CRB, GRI, is an AAR mediator and the managing broker at Keller Williams Lifestyle Realty in Phoenix. His deep voice and commanding presence serve him well in the mediation room right from the start. “I put the complainant and respondent next to each other across the table from me,” he explains. “I throw down first the manual [NAR’s Code of Ethics & Arbitration Manual] and then the complaint and explain that neither apply today. The rules are there are no rules, except that anything they learn cannot be recorded or used in any other proceeding.”

Parties to mediations in which Best has participated comment on the calming influence he brings to the process. “I don’t allow issues to ruffle me,” he says. “In the structured mediation environment, I help people understand each other and listen without interrupting. I believe most people are interested in doing the right thing.”

Because the mediators are active REALTORS® who often have experience in other professional standards programs, they can provide additional perspective to the agents involved. When negotiations break down, the parties separate and the mediators employ shuttle diplomacy. This is often an opportunity for a mediator to explain to the two parties what the options are beyond mediation. “I explain to the agents that I’ve been on hearing panels and know what can happen,” says Watrous. “I can’t tell them what to do, but sometimes I can nudge them into the middle.”

“A couple of times we’ve gone into caucus and I’ve told the agent, you need to make this stop here because I’m seeing the possibility of a Fair Housing violation or things that could affect your license,” Warren reports. “Sometimes the agent doesn’t even know how bad this could get if it isn’t stopped right there.”

Choose Mediation

“Our industry is based on cooperation and agents working well together,” notes Fuchs. “Every bridge you burn reduces options for your client and your business.” Mediation allows you a low-risk way to resolve differences.

“If you are party to a complaint and have received a request from AAR to mediate, the question should not be ‘Will you agree to mediation?’ but ‘How quickly can the mediation be scheduled to manage the dispute?’” asserts Steward.

“I love when people grow up and act like adults,” says Warren. “And you can quote me on that.”

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Learn More about AAR Mediation

AAR’s website provides information on mediation for ethics disputes or for business disputes (involving money). Separate request forms are available for the two types: ethics mediation request form or business dispute mediation request form.

In addition, AAR coordinates a buyer-seller mediation program. Since 1992, the AAR contract has contractually obligated the buyer and the seller to mediate any dispute or claim arising out of or relating to the contract:  “Buyer and Seller agree to mediate any dispute or claim arising out of or relating to the Contract in accordance with the REALTORS® Dispute Resolution System, or as otherwise agreed. All mediation costs shall be paid equally by the parties.” (Contract, lines 285-288)

MEDIATION TESTIMONIALS

Mediation evaluations are requested from the parties to every mediation that is held through AAR. Here are a few of the evaluation comments regarding the AAR mediators and the mediation process:

“The mediator did an excellent job handling the mediation and helping [us] resolve the issues between both parties.”

“I received a very nice thank you from the seller. She was pleased that through mediation, we handled this so professionally.”

“Extremely effective and professional! The mediator did an excellent job mediating the dispute. My client was equally impressed. Thanks so much!”

“The mediation accomplished what was needed to satisfy my complaint.”

“The mediator really did a good job, handled everything exceptionally well.  We paid but was worth the time and money to resolve the matter.  Thank you.”

“I realize the mediator had a tough time getting an agreement…but it did resolve!”

“[The mediator] was great.  Very neutral and gave advice on how to avoid future complaints.”