Photo: CTV
New provincial rules will change how real estate agents in British Columbia can represent their clients, and the impact will be significant in the Okanagan.
The government announced the rule changes–aimed at “enhancing consumer protection”–last week, with the most significant of them banning a practice known as “dual agency.”
Dual agency lets a realtor represent both the buyer and the seller in the same transaction. Many see the practice as problematic, because it puts realtors in a situation where they are unable to act in both clients’ best interest.
Others have argued, and even the government admits, the practice is useful in specific situations. However, even those who see a place for dual agency admit it has its share of problems.
Regardless, the practice will soon be banned in British Columbia, and that is going to mean big changes for many local realtors.
Happens all the time
Mark Walker, a Kelowna realtor who runs Walker Real Estate, says dual agency happens all the time in the Okanagan.
Walker’s firm recently stopped using the practice, but he says it’s not uncommon for firms here to use it for 10 per cent or more of their sales. Meanwhile, some of the biggest local firms are “double-ending” more than 25 per cent of their transactions.
With those firms no longer able to use dual agency, it could mean a significant hit to their profits.
“When I sell my own listing, I’m essentially making 100 per cent of the fee. When another agent sells my listing, I’m essentially making 50 per cent of my fee,” Walker explains.
And it’s that dynamic that’s at the heart of many of the criticisms of dual agency. It’s also why the government decided to largely ban the practice.
When it comes down to it, Walker says, it’s just not possible to to give the best service to each client when you stand to make money on both sides.
Lawyers know they can’t fairly represent both the plaintiff and defendant in a court case, he argued, so it stands to reason realtors can’t represent two sides either.
“Dual agency prevents you from really negotiating hard, disclosing everything you know–all those things I feel like a good agent brings to the table,” he says.
‘Serious problems’
Walker says in the 20 years he’s been in the business, most of the realtors he’s seen get officially reprimanded were punished for a misuse of dual agency.
“It’s not that agents are unethical, it’s just really hard to do the same job for two people,” he says.
Micheal Noseworthy, the province’s superintendent of real estate, agrees.
“Ending dual agency removes the potential for conflict and serious problems,” he said in a recent press release. “We want to create transparency for both consumers and licensees to ensure everyone understands in whose interest licensees must be working.”
While Noseworthy said the changes will “significantly change the way that real estate services are provided in British Columbia,” Walker said he believes the industry will be O.K.
He pointed out that there’s a ton of money to be made in real estate right now, and that with some adjustments realtors should come out of the changes fine.
In fact, he said this will likely lead to better service in the industry overall, because everyone buying or selling a home will now have their own representation.
“Personally, I think that there’s going to be some pain here, there’s going to be a shift of income, people are going to have to strategize their businesses differently… But I think that over the long run, our industry is going to be better off,” Walker says.
The new rules will come into effect beginning March 15, 2018.
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