NOT across the industry!!

shutterstock_135232376I’m not worried about the CBC Marketplace report showing that some sales representatives or brokers are offering to break rules in order to double end a deal because I would not have been filmed doing this. This practice is illegal. There’s a big difference between Customer Service and Agency and we MUST be experts in knowing who we are talking to and what secrets we are giving away. CBC hasn’t named the people caught on tape breaking the rules, but hopefully our regulating body (RECO) will be able to get the names and punish the offenders appropriately. CBC’s reason for not giving up the names was that “experts told Marketplace the problems are not specific to individuals but exist across the industry”. I disagree.  During the past few years, I’ve been to hundreds of offer presentations on behalf of my Buyer clients and I can say that the majority of professionals are just that … professional.  Once in a while, we’ll come across someone who seems as if they may be breaking rules, but there’s not a lot we can do about it because of the secret nature of the multiple offer process.

The bottom line is that I would NEVER be filmed making these promises to potential buyer clients because I would NOT do this. If I am already representing the Sellers, I usually explain to any potential buyers that they will be treated as a customer. They’ll get honesty and fairness, but I will not divulge secrets.

We did have one situation where we listed a house and then our current Buyer clients wanted to make an offer. Pat sat with the Sellers and I sat in another room with the Buyers. I didn’t offer price advice to the Buyers but did follow their directions to improve their offer. I had no idea what the other offer was. My Buyers were very keen to get this house, likely had more money to spend, and they offered enough so that the Seller preferred their offer.  The only reason that these Buyers were treated as clients was because they were already clients. But that meant that neither Pat nor I could advise them about what price to offer. Nor could we advise the Sellers about what price to accept from these particular Buyers. This is Real Estate 101 and all of us should know this inside and out.

That doesn’t mean that Buyers aren’t under the impression that there is something to be gained by “going through the listing agent”.  A month ago I was sitting in a Tim Horton’s with some buyers who came through my Open House. We were going to be putting together an offer. They asked me to help them out with price … to give them a hint about what the Seller would accept.  I clearly explained, again, that the Sellers were the clients and that while I was very happy to be honest with these buyers, any fiduciary duties were owed to my Sellers, which means I would keep their secrets.  These buyers asked me if they should just get their own agent and I suggested that it might be the best idea. I got home an hour and a half later than I was supposed to, didn’t get the other side of that commission, but I did my job and I did it properly. My Sellers were well represented.  And if I had provided customer service to these buyers, I would have followed the rules to the letter.

If everyone understood Agency and followed the rules, we wouldn’t have to change a thing. Changing the rules so that Multiple Representation is no longer allowed wouldn’t stop what was recorded from happening. These offenders could just refer the Buyers to a friend who was in on the scam. The best way to handle this situation is to punish the offenders and the only way that RECO can investigate is if they have names.  It’s likely that these people would no longer be allowed to trade in Real Estate and that would be the best outcome.

Marketplace Story

 

Did you read Schedule B?

 

Schedule B.jpg

Someone asked why photos of the home they had purchased were still posted on-line and Joseph Richer, the Registrar of RECO, answered as follows: “once ownership of the home has been transferred to you — the new owner — a seller’s representative can’t make any reference to the property in advertising without your written consent. That includes posting photos of the home on their website or anywhere else.”

Mr. Richer went on to add that “before publishing an ad that contains the selling price, closing date or other details about the deal, a sales representative needs to obtain written consent from both you and the seller, regardless of who owns the property at the time of the advertisement.”

Have you given written consent to the listing brokerage to advertise these details of your agreement?  Look through your agreement for the listing brokerage’s Schedule B.

Most brokerages include clauses in a schedule to cover under what terms interest will be payable on your deposit. Other items are also included. I like to include a limit of one hour on any revisits and agreement that the deposit will be a bank draft. Sometimes there are clauses where the Buyer and Seller both agree that they have not received any professional advice from either brokerage like legal, engineering or environmental advice.

But there is a troublesome clause that I always adjust for my buyers, and that’s this one:

“In accordance with the Privacy Act (PIPEDA), the Buyers and Sellers hereby agree to allow the Listing Brokerage and their Representatives to distribute information pertaining to the sale of the property in future marketing material upon this Agreement becoming firm and binding. Such information may include the price but shall not include the names or personal information about the Buyer or Seller.”

There is no end date in this clause so I always add “until completion only” which gives permission to advertise the sale details until the closing date only.  It makes sense that a Listing brokerage will want to be able to advertise that they successfully sold the house and that usually includes the price or some sort of identifying information about the price – like 102% of asking or $50,000 over asking.  If this is not acceptable to you as a Buyer, ask your representative to get rid of the entire clause.

Be warned that changes to this clause shouldn’t negatively affect you in a multiple offer situation because this won’t affect the Seller’s bottom line, but this will depend on how the change is explained to the Seller.    Click the link below to read the article.

See Toronto Star Article here