Mediation has been around for a long time as both an alternative and preventative to litigation. Many state courts require mediation or arbitration as a first step before allowing disputes to proceed to a court hearing. Realtor organizations have used mediation and arbitration to resolve commission disputes between members who are prevented by association rules from suing each other.

Now, more some real estate associations are providing buyer/seller mediation services as a new member service to help resolve conflicts between members' clients comfortably. States like California and Minnesota are leading the way.

Tech-forward Californians are offered an Internet service provided by the California Association of Realtors(CAR) and run by SquareTrade Inc. which allows homebuyers and sellers to resolve their disputes online.

"We have always been involved in dispute resolution," explains CAR's general counsel June Barlow. "This is the next step in making it more accessible. We have remote parts of California that don't have access to mediators, and it is convenient for busy people to go online. People also move around a lot and distance is a hurdle. This way you are home at your PC."

SquareTrade.com handles all kinds of disputes, including those between traders at sites like eBay. SquareTrade.com spokesperson Taber Reiner says, "We handle hundreds of thousands of disputes, and we are tracking between 5-10 mediations a month in real estate. We don't have our settlement rate for the real estate sector, but our settlement rate is about 85 percent. It is so new, coming from traditional mediation, and it has been a great process to watch. We are approaching other states."

Squabbling parties can log onto SquareTrade and post their complaint, and SquareTrade contacts the other party involved, where the two can "chat" their way to agreement in a neutral environment. At $25 per side, the resolution is quick and cheap, but some problems may be sticky enough to require a human mediator. Then the price goes up to $150 an hour until the parties reach resolution.

There is also a section online where Realtors can dispute commissions.

Barlow calls online mediation part of the electronic trend. "It's another piece of our electronic vision for the future," she says.

Disputes can arise before a transaction closes, especially if a buyer wants to get out of the contract and get his/her deposit back. A seller may feel entitled to the deposit for having removed his/her home from the market. Disputes between buyers and sellers can also occur after closing, if a buyer feels that the condition of the home wasn't properly disclosed, or if an appliance or fixture or feature has not been included which the buyer was expecting.

Some disputes can be small, but others can be huge. In some cases, small claims court is the only alternative. In others, a law suit is the only way to get restitution. Mediation can head both off at the pass.

Because of the sensitive and complex nature of the real estate transaction, the Minnesota Association of REALTORS(r) (MAR) is now offering Buyer-Seller Mediation Services, a face-to-face mediation program for dispute resolution.

For $200 per party, disputing buyers and sellers can sit down at the mediation table with an experienced, trained "neutral."

Linda Modlinksi, senior vice president of MAR explains the trend behind associations acting as go-between for their members' clients. "With the size of California, that may have something to do with why they chose the Internet route," says Modlinski. "We want to do face-to-face mediation. The Internet offers some convenience factors, but the face to face method gets both parties together and their willingness to sit down is important to the resolution process."

"Mediation is voluntary," she explains. "Both parties agree to mediate the dispute. In arbitration, the decision is made by the arbitrator, and both parties have to live with it. In mediation, both parties come together and present their story, the qualified neutral works with them and gets them over who is right and wrong, and what both parties are willing to do to resolve the issue. Mediation allows them to have a say in the results."

Mediation is more user-friendly and puts both parties at an advantage, explains Modlinksi. "If they are willing to resolve it, they can have a say, the mediation officer will listen and then hold independent caucuses with each party, and it gets them thinking about what they would be willing to offer. The mediation officer never makes the decision. If they agree to a settlement, it is binding."

Mediators are chosen from a group of experienced Realtors who have gone through mediation training. "They list and sell real estate themselves and have a good knowledge of problems and solutions," says Modlinksi.

How are the proceeds distributed? "The $400 pays the mediation officer and the expenses for setting up the meeting," says Modlinksi. "It's not a service where the MAR is going to make a profit, but again our purpose is to provide beneficial services to our members. Mediation is gaining in popularity in all areas including the courts, which are using mediation whereever possible, and it is great way to provide buyers and sellers a way to make their own decisions."

If mediation doesn't work, then the disagreeing parties are left to seek other alternatives - arbitration, small claims court, or civil litigation. "Mediation is not meant to take away from other avenues, but it is alternative to reach an amicable decision before they have to result to other avenues," says Modlinksi.

Published: June 12, 2002

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