Realtor® mediation: Resolve conflicts and preserve relationships

An arbitration award can sting like a bad call at home plate.  Say another broker refused to pay your share of a big commission.  As a Realtor® your only recourse was to seek arbitration which almost always results in an all-or-nothing decision—with extremely limited right of appeal.  Even though one side may have felt great, the arbitration process can cause long-lasting damage to professional relationships.

Let’s face it: conflict is part of life in real estate—but good business relationships depend on the ability to work through disputes and not simply dispose of them.  We all know that Realtors^® must agree to arbitrate their complaints but the Realtor® association also provides another process that can help resolve conflicts and save relationships: mediation.

Mediation is similar to negotiation, where parties talk through issues and, perhaps, work out a solution on their own terms.  The main difference is that mediation includes a neutral third party—the mediator—to facilitate the discussions.  But this is an important difference.  Whereas negotiations can get off-track with heated emotions and one-sided bullying, a good mediator sets an agenda and ground rules for discussion, levels the playing field by controlling the parties and helps to overcome deadlocked issues.

The process is less formal than arbitration because mediation is based on principles of voluntariness and party control. At some point in the proceedings, mediation must be made available to all parties involved in arbitrations. Generally, both parties must agree to mediate a dispute voluntarily, though a recent amendment to Article 17 of the Code of Ethics gives local associations the option to require mediation when requested by either party. During mediation, parties may address important issues that have caused a conflict but which otherwise might not be brought before the arbitrators. The mediator has no power to impose a judgment, like a judge or an arbitrator: her role is to promote communication and help parties reach a satisfactory, creative solution.  If the parties don’t reach an agreement, either side may request that the case be returned to arbitration.  But if the parties do settle, the mediator can draft an agreement on the spot.

Contract disputes among Realtors^® tend to lend themselves naturally to mediation.  Agency, partnership, and sales issues all involve continuing relationships, as well as specialized terms, and parties can benefit from getting through these disputes without burning bridges.  In Realtor® mediations, the parties can choose a neutral who knows their industry and regional practices.  The parties can also choose how involved the neutral will be in the process and which issues to focus on.

Your local association should have a roster of specialized, trained real estate mediators who are available to handle member disputes.  If your local association participates in the statewide professional standards cooperative, PAR would provide a mediator. The mediators typically are real estate professionals or legal professionals in real estate practice, familiar with industry standards.  The process offers Realtors^® an effective and creative alternative to resolve their professional disputes, without resorting to risky arbitration.  But knowing the options is the first step: if you are involved in an arbitration case and want to know more, contact your local association, PAR or the Legal Hotline for more advice on how to move forward with a process that may help resolve your dispute quickly and effectively.