Watchdog calls for real estate reforms, penalties of up to $250,000

Independent Advisory Group issues findings on alleged wrongdoing by realtors, issues 28 recommendations

Recommendations for reform have been released for B.C.'s real estate industry.

Recommendations for reform have been released for B.C.'s real estate industry.

A four-month probe of alleged wrongdoing in the real estate industry has recommended wide-ranging reforms, including higher disciplinary penalties of up to $250,000 for realtor misconduct, and up to $500,000 for agencies.

The Independent Advisory Group chaired by B.C. Superintendent of Real Estate Carolyn Rogers has issued 28 recommendations, many of which are designed to better protect the public from unscrupulous agents.

They call on the Real Estate Council of B.C. to undertake a major overhaul of its practices, implement a new ethics code, add disclosure rules and block licensees from engaging in certain practices.

The investigation came in the wake of revelations of misconduct by realtors in Vancouver’s overheated property market.

Several academics have cited an influx of foreign investment money, mainly from China, as a significant factor driving property prices up beyond the reach of many working people.

“I think what’s going on in British Columbia is that houses are no longer just homes, they are trading as investments, and that puts pressure on a regime that was never designed for that,” Rogers told reporters.

The IAG report lists several reasons for rising prices: a strong economy, people moving to the Lower Mainland from elsewhere in Canada and abroad, buyers “motivated more by investment considerations” than a need for housing, the “self-reinforcing market psychology that takes over in a period of rapidly rising housing prices” and the region’s geographic constraints – water, mountains, the U.S. border and the Agricultural Land Reserve.

The provincial government has already moved to block undisclosed shadow-flipping of contract assignments, where a home is resold at a higher price without the knowledge of the original seller to other buyers, allowing realtors to collect more commissions.

The report recommends those new rules – which requires the return to the original seller of  any additional profit from contract assignment – also extend to sale-by-owner property deals done without realtors to keep shadow flipping from merely retreating to an unregulated part of the market.

Another recommendation would ban realtors from buying or acquiring an interest in a listed property for which they are acting as agent.

It also would compel high-volume “opportunistic” buying of property directly from owners – sometimes known as wholesaling – to be subject to licensing standards.

A confidential complaints reporting system should be set up, it said, to encourage those in the industry or the public to raise concerns without fear of retaliation.

One of the recommendations would end dual agency, where a realtor can act for both the buyer and seller in a transaction.

The IAG report criticizes the Real Estate Council for failing to adequately enforce the rules it already has against unethical behaviour, noting it took little action against agents who were found not to be complying with other regulations, such as reporting requirements to counter money laundering.

The penalties go up from a current maximum of $10,000 for realtor misconduct and $20,000 for brokerages. Those have been denounced as rarely enforced, and merely a cost of doing business when they are.

The advisory group did not contemplate ending self-regulation of the real estate industry entirely.

“Ultimately that is a decision that only government can make,” the report says.

But it calls for at least half of the council’s 17 members to be appointed from outside the industry.

The province is expected to announce more measures tomorrow.

Finance Minister Mike de Jong has previously signalled he intends to keep the industry on a short leash.

“The report is a comprehensive examination of the practices and challenges plaguing the real estate industry right now, and paints a troubling picture,” de Jong said in an emailed statement Tuesday.

The benchmark price of detached houses in the Greater Vancouver area topped $1.5 million in May, up 37 per cent from a year ago.

The report cautions its recommendations are to ensure buyers and sellers are treated fairly but they are unlikely to stem Metro Vancouver’s soaring home prices,

Real Estate Board of Greater Vancouver president Dan Morrison said “stress cracks” in the system have opened from the rapid rise in prices, shining a spotlight on a few bad apples.

“The volume and what’s been happening in the market has created a situation that nobody anticipated,” Morrison said. “We’re happy to fix those problems to restore the public’s faith in our profession.”

IAG Report June2016 by Jeff Nagel

Just Posted

Chilliwack’s Jordyn Huitema, a member of the Canadian national women’s soccer squad.
Another scoreless draw for Chilliwack’s Jordyn Huitema and Canadian national women’s soccer squad

Canada played Brazil to a 0-0 tie days after doing the same in a friendly against the Czech Republic

FVRD surveyed public opinion on cannabis production and processing in the electoral areas. Odour and distance from residential areas were the top concerns. (Black Press file)
Cannabis production and processing rules being drafted by Fraser Valley Regional District

Data from public opinion survey will be used to guide cannabis-related land use

Robert Nelson, 35, died after being stabbed at a homeless camp in Abbotsford on April 7 of this year.
Mom pleads for information about son’s killing at Abbotsford homeless camp

Robert Nelson, 35, described as ‘man who stood for justice, honour, respect’

Police arrest the suspect in an attempted armed bank robbery on June 2 at the Scotiabank at Gladwin Road and South Fraser Way in Abbotsford. (Photo by Garry Amyot)
Abbotsford bank robbery suspect who was stopped by customers faces more charges

Neil Simpson now faces total of eight charges, up from the initial two

Black Press file photo.
COVID exposure recorded at Kent Elementary

Students, families encouraged to keep monitoring for symptoms

Canadian Prime Minister Justin Trudeau participates in a plenary session at the G7 Summit in Carbis Bay, England on Friday June 11, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada donating 13M surplus COVID-19 vaccine doses to poor countries

Trudeau says the government will pay for 87 million shots to be distributed to poor countries

Kelowna-Lake Country MLA Norm Letnick, assistant deputy speaker at the B.C. legislature, presides over committee discussions. The legislature is completing its delayed spring session this week, with most MLAs participating by video conference. (Hansard TV)
B.C.’s daily COVID-19 infections dip below 100 over weekend

Only 68 new cases recorded Monday, four additional deaths

The BC Ferries website went down for a short while Monday morning following a provincial announcement that recreational travel between health authorities can resume Tuesday. (Black Press Media file photo)
BC Ferries’ website crashes in wake of provincial reopening announcement

Website back up now, recreational travel between health regions to resume as of Tuesday

The Kamloops Indian Residential School is photographed using a drone in Kamloops, B.C., Monday, June, 14, 2021. The remains of 215 children were discovered buried near the former school earlier this month. THE CANADIAN PRESS/Jonathan Hayward
Communities grapple with what to do with former residential and day schools

Some tear them down as a tool to help healing, others repurpose them as tools for moving forward

FILE – Provincial health officer Dr. Bonnie Henry talks about B.C.’s plan to restart the province during a press conference at Legislature in Victoria, Tuesday, May 25, 2021. THE CANADIAN PRESS/Chad Hipolito
B.C. watching U.K.’s COVID struggles but don’t think province will see similar pitfalls

Studies show that one dose of vaccine is only 33 per cent effective in preventing B.1.617.2 spread

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

RCMP Const. Shelby Patton is shown in this undated handout photo. RCMP say that Patton was hit by an allegedly stolen truck that he had pulled over on Saturday morning in Wolseley, east of Regina. THE CANADIAN PRESS/HO, RCMP
Pair charged in Saskatchewan Mountie’s death make first court appearance

Const. Shelby Patton was hit by an allegedly stolen truck that he had pulled over Saturday morning

David and Collet Stephan leave for a break during an appeal hearing in Calgary on Thursday, March 9, 2017. THE CANADIAN PRESS/Todd Korol
Appeal Court rejects stay for Alberta couple facing third trial in son’s death

Pair accused in their earlier trials of not seeking medical attention for their son sooner

Most Read