Transcript
Episode 8 – Home Buying Advice & Tips with Stephen Carpenter Israel Buyer’s Edge
Introduction 00:00
This is Listen up Home Buyers. The only podcast offering Home Buying advice and tips from true buyer agents. Now here’s your host Victoria Ray Henderson.
Victoria Ray Henderson 00:10
My next guest for Listen up Home Buyers is the owner and president of Buyer’s Edge an exclusive buyer brokerage in Bethesda that opened its doors 29 years ago, Buyer’s Edge only works with Home Buyers and serves buyers in Virginia, Maryland and Washington DC. My guest was one of the first members of the National Association of exclusive buyer agents or neighbor, when it was formed back in the mid90s. It is a real pleasure to talk to Stephen Carpenter-Israel on the podcast. Welcome, Steve.
Stephen Carpenter-Israel 00:40
Hi back!
Victoria Ray Henderson 00:41
Well, I think we need to give some background so Steve and I know each other really well. Because my husband Marshall and I bought our house with buyers’ edge back. I think it was 1997. I loved the experience so much. The business model that when I wanted to switch up careers, I asked Steve if I could work with him and he said, yes.
Stephen Carpenter-Israel 01:00
It’s been great.
Victoria Ray Henderson 01:01
Yes.
Stephen Carpenter-Israel 01:03
We’ve had Marshall for even longer.
Victoria Ray Henderson 01:05
I know 18 years. Steve, obviously 29 years. I mean it’s been basically your whole real estate career.
Stephen Carpenter-Israel 01:15
Close. I actually grew up in the business because my father was a real estate appraiser. I got my license when I was right out of high school before I even went to college. I’d had my license for a long time longer than I’ve even been doing the exclusive buyer brokerage business.
Victoria Ray Henderson 01:31
Oh, wow. I didn’t know that.
Stephen Carpenter-Israel 01:34
Why don’t you tell you how many years because it’s just embarrassing?
Victoria Ray Henderson 01:38
Hey, you’re still here. That’s the good thing. Why did you think of this Exclusive Buyer Brokerage? I mean it wasn’t really on the map so much. It wasn’t even on anybody’s radar in real estate. What made you come up with thinking? Yes, I just want to work with Home Buyers.
Stephen Carpenter-Israel 01:55
Well, it was an interesting ride for me because when I got out of college, I went to work in the commercial construction business for a number of years both working for a midsized company building, shopping centers and all this other stuff and then on my own for a while. I love the construction business and I was also. I still had my real estate license so I was occasionally doing deals where I was helping people buy or and I listed one or two houses when I was really young and my wife Wendy was actually working in the real estate business as a traditional agent at the time and in 1989 and 90. The commercial construction market just crashed and burned. We had our first house we had our first kid and we were in a position where fortunately I was able to look at other options. One of my friends was buying a house in Colorado and using an exclusive buyer broker, I’d never heard of it. He kept calling me and asking me about this, how this work. I thought it was fascinating. I literally got on a plane about six months later and went out and met Barry Miller, who was one of the early guys in the business.
Victoria Ray Henderson 03:19
What city was he in? In Colorado!
Stephen Carpenter-Israel 03:22
He was in Boulder. I went out and met with him just to check it out because I thought it was so cool. He had done a great job for my friend. It was an interesting leap of faith but I decided at that point with my construction and real estate appraisal backgrounds. It just was a great fit for me personally to represent buyers.
Victoria Ray Henderson 03:48
Yes. When you open your doors. What did other local brokerages think I mean? Did you have to keep explaining what you were doing all the time and every transaction?
Stephen Carpenter-Israel 04:00
Yes, but it was quite a time because there was a neighbor was not even started right. There was no national association. There was no template for how to do this. We just knew that we thought it was a great idea. We were just dedicated to the consumer side of it and making sure that people got all the right information. In a way, I think that there was certainly a lot of pushback from other brokers in the area. But we were also it was such a bizarre thing for them that they just thought that we would be a total flash in the pan and be gone within months if not a couple of years. It no one they really didn’t pay that much attention to us and they you know and plus my family had been in the real estate business and when the two so people knew our names Yes, it wasn’t like we were that it wasn’t like we were total fly by nights [phonetic].
Victoria Ray Henderson 05:04
You had already been introduced to that all those people in the business and you were just taken a different turn. I want to dive into that just a little bit more because to me that that is like a critical piece of the whole idea of exclusive buyer brokerage. Why did you think it was a good idea? I mean your friend was older.
Stephen Carpenter-Israel 05:28
Yes. I think it’s interesting when he was doing traditional agency. We were talking about the business a lot. Yes she, I and one of our friends who were all buying our first houses. We’re just amazed at how wrong it all seemed that we were cooking and we were just everybody was basically being led down this path of don’t worry about who’s giving you information or not giving the information or what’s being like something was always being withheld from you as the buyer. At that point, all of our friends were buying no one was selling.
Victoria Ray Henderson 06:12
Everybody was young.
Stephen Carpenter-Israel 06:14
We were all up against the same thing. It just seemed crazy and interestingly, a lot of my friends because they knew that I had good basic knowledge kept asking me to come in and look at their houses. No one was doing even Home Inspections at the time.
Victoria Ray Henderson 06:28
No way. Are you kidding me?
Stephen Carpenter-Israel 06:30
No, we were. People were basically it was really caveat emptor absolute buyer. Beware! no one’s giving you anything that were no disclosures of any kind.
Victoria Ray Henderson 06:42
Wait a second, this is in the 80s.
Stephen Carpenter-Israel 06:43
In the early in 1990 just before we started. That was just a shock. It was honestly pretty shocking. Then plus there was a lot of consumer movement at the time, people were starting to really dig into consumer issues. This one was just right in your face. If you’re 30, something you’re buying your first house you got babies. You’re just like what is going on with all that it just seemed like it made sense and Wendy had been successful in the business. We still had the wherewithal to basically start something new because my construction business was still viable, although I could see the writing on the wall that the five years were not going to be great. We transitioned and started the business together. When he basically bailed on her traditional side came over right away and we jumped into the business.
Victoria Ray Henderson 07:53
Why do you think? Because this business model in my opinion, when I learned about it back in the late 90s, it’s just so I want to use the word pure, because it’s just straightforward? It takes a no brainer to figure it out. Why do you think so often we get clients? Home Buyers who come to us because they read a book and but yet the regular consumer who doesn’t do their homework before buying a home, they don’t know that neighbor exists. What do you think why is that?
Stephen Carpenter-Israel 08:23
Well, I think that, it really goes back it really is. You can point the finger at traditional brokerage firms because they have no interest in hat in having the business essentially the split into. Where companies would represent buyers and companies would represent sellers. But in theory, this is exactly what should happen. Is that from a legal perspective? It’s crazy that somebody can represent both sides of a transaction. Lawyers aren’t allowed to do it; accountants are allowed to do it. No one does it. Yes. It’s just wrong on so many levels. I think that the National Association of Realtors is basically all it was started by and run by companies that do listings and it still is. There’s no motivation unless it was done on a regulatory level. There’s no motivation for them to ever split up the business because they get both sides of the transactions on so many deals. It’s still amazing how many deals go down that way.
Victoria Ray Henderson 08:28
I know, hey, could you just break down in first of all buyers edge serves people in Virginia the district and Maryland. I was working the other day with a young lawyer actually in the district and he said, how many people do you end up with in DC as opposed to Virginia and for people who don’t know the geographic area? We are so close that frequently. In fact, I have three right now. we set up searches that cover right inside the beltway, Virginia, Maryland and DC and it’s a flushing out of what works for the client as to where they end up. But could you explain how? What the difference is with representation in Virginia, DC and Maryland?
Stephen Carpenter-Israel 10:17
Well, in each jurisdiction and it’s true of basically all 50 states, I mean, everybody has all kinds of different stuff. In Maryland and DC, there are different disclosures for in Maryland, you have to tell people who you’re representing and but you actually do that via having a contract. You must have a contract with your buyer client. You actually have to have a contract with your buyer and a disclosure that says that the buyer knows that you’re working for them? Well, I mean, this is the biggest bunch of nonsense I’ve ever heard, because rain person that really needs to know who you’re working for is the other guy, in DC, where they actually have it, DC basically says that if you’re, you have to disclose to the person you’re not representing, who you work for. Yes, Virginia doesn’t even basically have any disclosures, because it’s a non-disclosure state. They don’t have any seller disclosure forms.
They don’t have anything, but they do basically say that you should tell us, tell everybody who you’re working for. But it’s a convoluted mess. Interestingly it’s one of the reasons that nationally. It’s appalling how many, how few people how few Home Buyers understand who their buyer who their agent really represents, or the person that they’re working for even represents, a lot of it is exactly for this reason is because it’s convoluted mess. Every state’s different but I wouldn’t say that the only people in the business who are able to get through that part of the process the disclosure process about who’s being represented and make it clear. I know, everyone else is trying to explain how they can have two agents that sit right next to each other, they can be husband and wife, one can represent the buyer, one can represent the seller and they can tell you that there’s no problem. It’s just nonsense.
Victoria Ray Henderson 12:34
It is nonsense. I mean, they could you also talk a little bit about how, like in Maryland, a single brokerage can represent buyer and seller. What about the district?
Stephen Carpenter-Israel 12:47
Yes, they can in the district too. So essentially, they can have two people that are on the same team. Two people that sit next to each other in the office. Two people who happen to be in different offices of the same company but they can all but one can represent the buyer and one can represent the seller. This is where it gets just really crazy, because everybody goes, Well, that’s not dual agency because the buyer is being represented by one agent and a list and the seller is being represented by somebody else. The point is that. This is where the public doesn’t understand it and is unlikely to ever really understand it is that their contract of the buyer and the seller’s contract is not with an individual agent. It’s with the broker of the firm. There’s with the company and the person who’s responsible, is the broker owner, essentially or the managing broker of that firm. Agents are the agents of the broker, they represent the broker, they don’t represent individually the client, so they’re agents of the firm, they’re not even in a position to be able to contract because they don’t have a license that allows them to a lot of agents have only been licensed for a month or two. They don’t have the capacity to actually do the contract only the broker does. Which means that the broker is representing both parties and that’s called dual agency. No matter how you split it up whether you’re allowed to do it, or you have to disclose it or you don’t disclose it or whatever. It’s a mess.
Victoria Ray Henderson 14:26
I mean I look back on my own experience, you can see why people who are busy with their careers and busy with their children and all of these things. Why this would just be too much? Oh, my God ok, I give up. I’ll just take whatever route is the easiest for me because then I think people could care less.
Stephen Carpenter-Israel 14:46
People are like, I don’t care. I’m going with Suzy. I’m going to go with Dave I’m going to go with the person who someone else recommended. Or I found you via I walked into an open house and they seem nice. Literally the public doesn’t understand what the issues are. Arguably, there are a lot of very, very smart, very good, honest people in the business on every side. We all do and we have feel like there’s a good professional community and all those things but the problems are– is the issues or when problems arise?
Victoria Ray Henderson 15:28
That’s what I wanted you to talk a little bit more about.
Stephen Carpenter-Israel 15:31
We have these kinds of things that we talked about with clients. It’s not really to scare people, it’s just to illuminate what some of the issues are. When you’re negotiating with someone, and their company is working on both sides of the transaction and you’re trying to get the lowest price on the best terms for the property, including, having inspections and doing all these other, doing all the due diligence stuff. They’re also representing the other side of the deal, then they’re in a position where they’re already under contract with the seller; to get the seller the highest price on the best terms trading but now that broker is in the position where they’re supposed to get the lowest price on the best terms for some buyer, who’s being represented by some other agent in the office, right now is from. What does happen to is it not only their issues about who, whose information are they going to disclose whose motivations, your financial stuff? The bigger problems are really, that if you’ve been working with an agent, who’s the who does both? And working with them as buyer’s agent, you’ve been working with them for months. They know everything about you. They know exactly how far you’re willing to go, how much cash you have what you think about the whole inspection process and how far you’re willing to go and in a bidding war and all of a sudden, they get the listing?
Victoria Ray Henderson 17:03
Yes, great.
Stephen Carpenter-Israel 17:05
Then they know and then by the way, I’ve got this new listing coming up. If you want to go see it, that’s great. I’ll let you work with someone else in the office.
Victoria Ray Henderson 17:19
By the way, I know everything about you It is a disaster.
Stephen Carpenter-Israel 17:21
That’s a disaster. Yes, that’s just one. But some of the other ones are really interesting or this has happened— it’s happened multiple times in our office where, there’s huge storms that come through in between the time when you’re under contract and the time that you’re going to settle the transaction in a basement floods, or a tree hits the house or something bad happened.
Victoria Ray Henderson 17:47
Yes, or a sewer line erupts in the basement. That’s exactly
Stephen Carpenter-Israel 17:53
Literally so the sewer line erupts in the basement and there’s two feet of sewage in a house that was basically pristine. The brokerage firm was representing the seller. They’re basically taking the sellers position that my client has to buy the house, they’re going to clean it up and then my client has to buy the house and essentially it. I’m explaining to my client, I said, Well, there’s no way that you have to buy a house because they’re not selling you what you bargained for. Which was a house that was in pristine condition and I never had a sewer backup? so you don’t have to buy the house and you should be able to get out of it. You can have to talk to a lawyer. Of course they did, and eventually they got out but it was awful. Hard to force our clients to stay in a deal.
Victoria Ray Henderson 18:51
That had sewage in the basement?
Stephen Carpenter-Israel 18:53
Yes, there was no way that the buyer is going to stay. That was their responsibility. You can imagine what happens. The buyer’s— the so-called buyer’s agent is also working for that firm?
Victoria Ray Henderson 19:06
I mean they have a vested interest to keep you in the deal as a buyer.
Stephen Carpenter-Israel 19:11
They may tell you that you can’t get out.
Victoria Ray Henderson 19:12
Well, that’s true. It’s funny, I don’t know if you remember this, but years ago, when I first started working with you, one day, you were in the middle of some crazy thing, and I’m watching you. Oh, my God, what a mess! You said, “I can’t wait to see you in the trenches in this stuff.” I’m watching you deal with this going?
Stephen Carpenter-Israel 19:35
It is a trenches, I mean we do. People think that most of the time, nothing goes wrong. The truth of the matter is that. I always ask my clients or people that I’m meeting with, especially at the beginning, I was like so you came and you found us, this exclusive buyer brokerage firm and we’re really happy that you’re here. Did you do it? I’m sure you did it because of what and a lot of times the answer is because we’ve heard all these horror stories. How many people do you know who bought something? and the something wasn’t right. No, sorry, didn’t come up that either raise the hair on the back of their neck or there was some real issue, but whatever we’re basically the only game around where you’re 100% sure that your client, your agent is going to represent your injury. No one else can offer you that.
Victoria Ray Henderson 20:31
Yes, I mean, we’re the only ones who advocate 100% I’ll never forget, there was a client who came in once and told me, a list of horrible experiences that this person had with other agents. This person happened to be in the military telling me, if I see another split level and I’m telling him, I don’t want to see him and then she turns to me and goes, I’ll shoot somebody. You want to work with me? I don’t know. What was so funny? When she left, he said, Oh, Yes, we’ll work with you. Now, she’s a friend. But when she left the office, Marshall looked over at me said, I’m scared.
Stephen Carpenter-Israel 21:11
I don’t know about this.
Victoria Ray Henderson 21:12
I don’t know about this. But it ended up being a fantastic experience because basically, she just wanted someone to advocate for her, just be straight with her.
Stephen Carpenter-Israel 21:20
Yes.
Victoria Ray Henderson 21:21
I’m talking to you February 2020. Can you give me a quick overview of what the markets right now?
Stephen Carpenter-Israel 21:29
The market DC is I would say it is impacted greatly by low inventory. It makes it hard for Home Buyers. Interest rates are low. A lot of people want to be in the market. You know and they want to buy there a house or move from one house to the next. But the fact of the matter is there are a lot of buyers out there and not a lot of listings out there. Interestingly, I also think that the market is wildly divided between the properties that are accessible, the Metro accessible, Yes, walkability, these things are unbelievably powerful in our market, where, with a minute that you go outside of the Beltway, or to places that aren’t easily accessible to markets, and in public transportation, parks and recreation. The minute that you’re in these kinds of excess suburban communities. It really changes.
Victoria Ray Henderson 22:43
Oh, it does.
Stephen Carpenter-Israel 22:44
You go outside the Beltway and the market, which dropped down 15 or 20% or more in 2007, 2008 has never really recovered. I know it’s come back some but so many people don’t want that product.
Victoria Ray Henderson 23:02
That’s right.
Stephen Carpenter-Israel 23:03
Maybe it’ll change. I mean, I think that it’s quite possible that it will be but the drive for everyone is to be in town or Metro accessible. It’s really that [crosstalk 23:14] it’s very difficult.
Victoria Ray Henderson 23:18
It really is. Some of our metro stations have a lot of parking. That has been working with some of the people that Marshall and I work with in terms, so we’re not finding what you want right inside the beltway where you can walk to the metro, but you can drive to, for example, the Glenmont Metro, which has two huge parking garages. If your company compensates for that thing, it can offset it, but it’s really tough.
Stephen Carpenter-Israel 23:46
It really is. I think that, driving to the Metro is fine, too. But I think that a lot of people are also walkability has become something that just didn’t wasn’t even on the register 20 or 30 years ago. I don’t want to be able to walk to not just something they want to be able to walk to a lot of things. Oh, Yes. they want to be able to walk to shopping, and just go for a walk and have access to bike trails and walking trails, and all this other stuff.
Victoria Ray Henderson 24:14
Yes, it’s just a quality of life issue.
Stephen Carpenter-Israel 24:16
I think that there’s just interesting things in the market today and there’s been a lot of hubbub, about what are deemed to be pocket listings and it’s problematic and something that the industry is trying to deal with the National Association of Realtors is basically trying to get everybody in line with not selling properties in house trying to without putting them out for public. When the public which is the definition of a pocket listing, for those of you who don’t know and so there’s all these twists to it.
They’re allowing people to put up listings in the in the multiple listing service and saying coming soon, but they’re not supposed to actually let anybody into that listing until it’s too late. Available to everybody but the truth is that, these pocket listings and coming soon things. They’re essentially, they’re ripe for abuse and they have been abused. I don’t think that general public understands how damaging that can be the pitches for a listing company is. Hey, we have information, all these listings that come up in our office and you’ll have access to them before anybody else will.
Victoria Ray Henderson 25:30
That right there, why in the world would you think as a buyer? That’s a great idea. They have something just for me and only for me, first of all, it sounds a fair housing violation.
Stephen Carpenter-Israel 25:42
Also remember who they represent, I represent the seller. So they’re inevitably their objective is to get the highest price on the best terms. Then it’s not an arm’s length transaction because right into it, they’re feeding it right to you at a price that they may not even be contemplating that it’s worth that much. They’re just saying, hey, if you want to pay a million for it, go ahead. This is the issue that we’ve talked about in our office and I think that is not out there, as much as it should be, is that this also is absolutely ripe with discrimination. Because you’re essentially saying that I’m the listing agent and that little brokerage firm gets to decide who sees the property and who doesn’t and what.
Victoria Ray Henderson 26:33
Is their criteria for that?
Stephen Carpenter-Israel 26:35
What’s their criteria? The point is, even if they don’t have any criteria, Great, well, we would tell anyone who’s associated with someone in our office, we’d be happy to do that. Well, the point is that, this is a little, teeny office that, it’s all Catholic enclave right in suburbia. In fact, they’re not showing it to anybody of color, of anybody who has any other religion with their firm, because they don’t know anybody. It’s all their clients just happened to be just like them. That’s who’s going to find out about those pocket listings or those listings that are coming soon not anybody else? Yes, I just think that everybody needs to take a really, really hard look at what they’re doing to the community by not allowing, public access to every listing that is comes up, it should be widely disseminated. I do think that there the argument against, doing that, is that, occasionally you have a client who’s, an ex-president, or a senator or somebody who has an extraordinary art.
Victoria Ray Henderson 26:36
Sure.
Stephen Carpenter-Israel 26:54
There are reasons that people do not want there they don’t want the general public to know that there are properties on the market, you don’t want people marching through their house. I think everybody gets that. But if, the listing brokerage firms are promoting that, you know and saying, “Hey, you don’t have to have everybody come through” we can cherry pick the people who see your house, then it by its very nature, they’re discriminating.
Victoria Ray Henderson 28:19
They’re not really serving that seller, if they’re not that sort of niche clientele that you just described. I mean, that’s ridiculous.
Stephen Carpenter-Israel 28:27
Well, it’s also, it’s very interesting, because I can’t tell you how many times we’ve had clients who are very wealthy clients are from other countries who are other race, creed, color and religions. They’re ready, willing and able to buy and the fact of the matter is that there are listings that they never found out about, because the listing companies were just keeping them to their own clientele and it’s horrible. It is. So, I hope that this movement now by NAR to push for the elimination of pocket listings and try to tighten up all that is a really good thing and I hope that they’re successful doing it.
Victoria Ray Henderson 29:09
Yes, me too. Well, I’m really glad you found some headphones so we could do this.
Stephen Carpenter-Israel 29:14
I had to go by them this morning. I don’t know what happened.
Victoria Ray Henderson 29:22
Well, Stephen Carpenter-Israel, the owner and broker or owner and president and of course broker Buyer’s Edge, an Exclusive Buyer Brokerage in Bethesda, thank you so much for joining me and I’ll see you at the office later today.
Stephen Carpenter-Israel 29:35
Great fun. Thank you.
Introduction 29:37
You’ve been listening to Listen up Home Buyers. The only podcast offering Home Buying advice and tips from true buyer agents.