The world according to Bill
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The Real Estate business in B.C. is regulated by the superintendent of real estate, Michael Noseworthy.
Noseworthy has proposed many different changes to our business and most of them are great and protect the public. However, he has also proposed to ban the practice known as dual agency.
I find it interesting how Noseworthy and the supporters of the ban on dual agency package it up. They say it will create “clarity” and “transparency” for the consumer.They seem to like to hang their hat on the idea that they are on the white horse coming in to save the day from all us bad and greedy realtors.
But let’s have a serious look at exactly what could change when the ban goes through.
I have talked to many consumers who think dual agency is about commissions. It has nothing to do with commissions.
Right now, when a consumer is working with a realtor and they want to buy one of their listings the realtor has to get the consumers to sign two documents. Those are a “working with a realtor ” form and a “limited dual agency” form. These forms explicitly spell out what the realtor can and cannot do.
The realtor cannot discuss price, personal characteristics or motivation. In other words, she can’t say she thinks the sellers will go to a certain price, or that they are motivated because they are getting a divorce, or that the buyers are going to be homeless in a month and therefore they need this house.
The realtor is obligated by law to be impartial in negotiations of price. They’re also obligated to disclose anything else: leaking in the basement, the roof is 25 years old and needs replacing, the lot across the street is going to be an apartment building, etc.
If the realtor does his job correctly the system works just fine and each party’s rights are protected. The consumer has the option to work with the realtor who knows all the details about the house, or get their own representation if they’re not comfortable with one realtor on both sides of the transaction.
How will things be different after limited dual agency is banned? First, the buyer who has spent time working with the realtor and building trust will be forced to go and find different representation if they want to buy the realtor’s listing.
They will have to go and find or be appointed a realtor who likely knows nothing about the house and will have to be brought up to speed on everything.
The realtor may, in some cases, set it up so the buyer is called an “unrepresented party.” In this case, the realtor has no obligation to disclose any material facts about the property to the buyer.
The biggest change is the buyer will not have the choice, and this is the crux of the issue.
Noseworthy is instituting this ban because there were a few realtors that handled the requirements poorly and put consumers in jeopardy.
The real problem, however, was realtors who grossly misrepresented themselves, went through the disciplinary process and got a mere $2,500 or $5,000 fine. They caused great heartache for consumers and they got a fine that did not even amount to the commission on the deal.
I have had realtors actually say to me that it is simply a cost of doing business. The problem was the punishment.
If Noseworthy thinks changing the rules is going to make the very small percentage of realtors who manipulate the system to their own gain and at the expense of a consumer suddenly wake up one and grab a bag of ethics he is sadly mistaken.
Not only that, the elimination of dual agency will create more opportunity for abuse, not less.
This change will allow many more people to be treated as unrepresented parties. Most of the time they will not know what this means regardless of the multiple pieces of paper they sign that they don’t read.
Unethical realtors will convince consumers to go into a contract as an unrepresented party where the realtor has far fewer obligations to protect that consumer.
Our business is like any other business. A vast majority of the realtors are ethical, caring people that take pride in doing their job and protecting people. A small percentage manipulate the system at the expense of unknowing buyers and sellers.
Changing the rules from something that works well if the rules are followed and people are allowed to make an informed decision to something that forces consumers to use a realtor they likely do not know, trust or want to use and provides less protection and greater possibility of abuse is just a recipe for disaster.
The intricacies and long-term consequences of this change are not easy to figure out. A person would have to have years of experience understanding the buying and selling process and what consumers need and more importantly what they want in order to truly understand it.
With all due respect for the office of the superintendent, it simply no longer has that experience built into it. Consumers that would prefer to not have their choices taken away and would like to see realtors adhere to their rules and explain their options and allow them to make the decision of who they deal with; really should speak up.
Bill Hubbard is a real estate broker and the owner and broker of a four-office real estate firm in the Okanagan-Shuswap. He has been in real estate for 28 years and has been an owner and broker in Vernon for 20 years. At almost 60 years old he is just as passionate about real estate as the day he started.
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