More changes potentially coming to the Toronto Real Estate Market! Part 2
March 20, 2019
Last month I touched on some potential changes coming to Ontario real estate regulations and how they may affect you. Here’s part 2!
You may have heard the terms ‘dual agency’ or ‘multiple representation’. This phrases are normally heard when one realtor is representing both the buyer and seller.
It’s a delicate situation to navigate through because as a realtor, you have to act in the best interests of both the buyer and the seller without giving away any confidential information such as the minimum price the seller would be happy with and the maximum the buyer is willing to pay. In most real estate sales, the seller pays a 5% commission to the listing brokerage, with the agreement that it’s equally split with the buyer agent’s brokerage. The potential benefit for the realtor is that if they work both ends of the deal, they don’t have to share the commission.
This scenario was banned in British Columbia last year, which I don’t think is fair. It’s possible to do the best for both parties and still have multiple representation. Granted, it’s an unusual situation that takes a lot of trust between all parties and the Realtor. It’s the bad apples that ruin it for the rest of us.
As a listing Realtor representing the sale of a home or condo, you are hired to find a buyer… marketing plans are put in place, social media strategies are planned and paid for and your job is to find a perfect match, but you’re not allowed to work the buyer that shows up to an open house or finds you though a Facebook post and wants to buy the property? How should this situation be managed? Do you refer them to another realtor and you don’t get paid for doing what you’re hired to do? We are still working for the seller, but it’s a tough one. An agent is hired to sell properties, so if someone comes to the selling agent as a result of the advertising and says they want to purchase it, it doesn’t always make sense to pass the buyer on to another agent.
The Ontario Real Estate Association hasn’t taken a definitive stance yet regarding the multiple representation/dual agency discussion. Personally, instead of an outright ban, I think they should tighten the rules and increase the fines for people who misuse it. The fine in BC for realtors who break the rules went from $30,000 to $250,000!
The other aspect of this is how to define ‘multiple representation’. Right now, it also refers to transactions where the buyer and seller are both represented by sales representatives from the same office. I don’t think two Realtors in one office should fall under that definition. Realtors often speak to one another and certainly their broker about upcoming listings. If I know that another agent in my office has a buyer looking for the type of property I’m about to market, they are the first person I’m going to speak to. If we can each provide for our clients what they want, saving time and money, I don’t see that there’s any conflict of interest there.
I believe we need to be held to a higher standard so everybody gets all of the information required. Dual agency should be allowed because the majority of real estate agents do their best to make sure everybody is comfortable with the agreement. There’s the added incentive of receiving a double commission so it’s a challenging situation as money makes people do strange things. I believe most realtors would be willing to waive part of their commission, knowing they’ve done the best job that they can.
The other change in the Toronto Real Estate market is that after years of litigation between the Toronto Real Estate Board and the Competition Bureau, the public is able to access the prices that properties sold for. I don’t know what all the fuss was about – people still need to register on a website to get the information.
After all the hubbub, nothing has changed. You can see what a property has sold for, but you still need to speak to a Realtor for perspective. We go into the properties and know what they’re like inside and whether they are relevant to your real estate needs. In today’s marketplace, time is a valuable commodity and if you trust the Realtor you’ve chosen to work with, then having them “weed out the noise” and fine tune your knowledge resources so that you’re not wasting your time muddling through endless irrelevant listings, that’s value… and that’s my job!
If you have questions about the Toronto real estate market or are curious about what your home is worth, please give me a call!