On March 15, 2018, B.C. will become the first province in Canada to ban most real estate agents from acting as dual agents: representing both the buyer and seller on the same sale. The lack of action by the Real Estate Council of B.C. to punish the rotten apples in the real estate industry have made this change necessary.
We all remember the recent horror stories that made front page news regarding a small group of very unethical, and in my opinion, criminal realtors, who ripped their sellers off. Most of this happened in the overheated market of Vancouver. Realtors acting as dual agents for buyers and sellers (in many cases these realtors were even the buyers) were feeding their greed. Christy Clark and the then in power Liberals found it easier and politically more expedient to punish the whole industry instead of singling out and prosecuting these unethical individuals.
Personally, I have no problems with the changes coming into effect March of next year. Our team has always tried to avoid dual agency whenever possible. In those few cases where this was not possible, because of regulations related to the transaction, it was always uncomfortable for us as the real estate agent as well as for one or both of the contracting buying or selling parties.
For many in the industry there has always been a huge question mark why Canada allows dual agency at all. Before moving to Canada, our family owned and operated real estate offices in Germany, Holland, and other European jurisdictions. In no other country was it possible for a real estate broker to act for the buyer and the seller at the same time. It was always one or the other. This system results in a more customer oriented approach by the agent and has the side benefit that the buyer or sellers knows that their realtor is working just for them because they are also being paid directly by either the buyer or seller!
Here in B.C. & Canada the real estate brokerage fee system is based in nearly all cases on “the seller pays it all” scenario with the commission then being split between the selling and buying agents! This situation made the dual agency solution necessary for decades. And I must admit it worked ok until a small group of greed driven real estate agents abused the system.
B.C.’s superintendent of real estate Michael Noseworthy says changes set to take effect March 15. 2018 include better informing buyers about how much compensation realtors are entitled to, as well as restricting so-called “dual agency.” “People are going to know and have assurances and have a legal framework in place that ensures that when they’re paying commission to someone that that person must act in their best interest and only in their best interest throughout the transaction,” says Noseworthy. In my humble opinion, the words and thoughts of the superintendent are just wishful thinking.
Not using the already available legal tools and legislation to punish the wrongdoing of single real estate agents, and instead destroying a system that for decades has worked well when the rules are followed, cannot be the solution. The superintendent leaves a whole industry in uncertainty. The way many real estate offices are currently working is about to change dramatically and the current real estate team business model will be destroyed.
How will this serve the consumer? That is not clear, and we will all have to figure that out together. The buyer and seller on one end and the real estate industry on the other end. But I am convinced that this current step will lead to a whole set of new issues and bring more changes, both good and bad for the industry and the customer. But change is a necessary part of life with the results that are often unpredictable. On a personal note, I would like to thank all the readers for their interest in my column for 2017. Your feedback is always welcome, and unlike too many politicians these days, I respect and appreciate other opinions. This is what keeps our society growing for the better. To all of you a Merry Christmas and enjoy the spirit of the season.
Sutton Broker HHS & Agassiz