I have personal experience with real estate mediation, and this is what I learned.
If you go to mediation to settle a real estate dispute, you may discover, as I did, that compromise is often more important than finding the truth.
Amazon founder Jeff Bezos recently shared an interesting perspective on resolving disagreements. He argued that compromise is often one of the worst ways to settle a dispute. His example was simple. If one person says a ceiling is 11 feet high and another says it is 12 feet high, calling it 11.5 feet high does not make either person right. It simply creates a middle ground.
The same principle applies to real estate disputes. When buyers and sellers disagree, compromise often seems like the easiest solution. However, the goal should be to determine what is fair based on the facts, the evidence, and the contract.
That was not my experience. Several years ago, before my husband and I moved to La Canada, we owned a home in Glendale’s Fair Oaks neighborhood. We sold the property, and escrow was scheduled to close.
Shortly before closing, the buyer canceled the transaction. She was about six months pregnant and said she was concerned about losing income if she took an extended maternity leave. From my perspective, she knew she was pregnant when she agreed to buy our home. Therefore, I did not believe she was entitled to a refund of her earnest money deposit.
Under the terms of the contract, escrow could not release the deposit without written instructions from both parties. We would not agree to return the deposit, and the buyers would not agree to let us keep it. As a result, the money remained tied up in escrow.
At the time, I was angry. Frankly, I was content to let the money sit there indefinitely. After about six months, my husband encouraged me to participate in mediation. During the mediation session, I quickly realized that the mediator’s primary goal was not to determine who was right or wrong. Instead, the goal was to reach a settlement and avoid arbitration.
The process felt less like a search for the truth and more like an effort to wear both sides down until someone agreed to compromise. After hours of negotiations, that is exactly what happened.
Eventually, we settled. We kept half of the earnest money deposit, and the buyers received the other half. Looking back, I understand why mediation works. It saves time, reduces legal expenses, and helps parties avoid arbitration or litigation. However, mediation is not necessarily about proving your case. It is about resolving the dispute.
That is an important distinction.
Having this experience is one of many that make me a better, more educated Realtor.
If you become involved in a real estate dispute, understand that mediation is designed to help both sides reach an agreement. It is not a courtroom, and it is not a fact-finding process. Depending on the terms negotiated in your real estate purchase agreement, the next step after unsuccessful mediation may be arbitration. In some cases, it may even involve attorneys and litigation.
Before you sign a contract, make sure you understand how disputes will be handled. Someday, that clause may become much more important than you think.
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