Province's review of rules governing real estate agents welcomed by realtor association, regulator
The professional association and the licensing body that oversee real estate agents both say they welcome the Ontario government's decision to review the rules that their members must follow to sell homes in this province.
Premier Kathleen Wynne announced the review as part of the 16-point plan announced Thursday to rein in the double-digit spike in home prices.
In the government's background information the practice of "double-ending" — when one agent represents more than one party in a transaction — is specifically mentioned.
In Ontario, one agent is allowed to represent both the seller and a bidder, a practice that some say fuels bidding wars and drives up prices. Double ending, also called multiple representation, is banned in most other provinces.
Housing Minister Chris Ballard says he's heard from home buyers, brokers and agents about the practice.
"They are more and more uncomfortable with this practice, especially when it's used to drive up prices," said Ballard.
"It's quite legal and personally, I don't have a problem with it when it's done properly, but we're hearing far too many incidences of when it's being used with two or three buyers to drive up the price of a home, he said.
And it's absolutely unfair that these houses are driven up so fast and shutting so many of us out of the marketplace."
In most provinces, sellers and buyers are usually represented by separate agents: a listing agent and a buying agent. In Ontario, the same agent is allowed to represent and negotiate on behalf of both parties, as long as it's disclosed to all parties involved in the transaction.
The arrangement creates the potential for unethical behaviour and a conflict of interest, especially in the now all-too common instance of a bidding war.
A CBC Marketplace investigation last year found that some real estate agents in Ontario broke the rules for double-ending by promising to give prospective buyers inside information to help them win bidding wars.
Marketplace found that agents would also offer unfair advantages to potential clients as a way of getting them sign with them for the purchase and sale of their home. The practice could increase the agent's commissions and potentially push up prices.
The review of the rules has the blessing of the Ontario Real Estate Association and the provincial regulator, the Real Estate Council of Ontario.
Tim Hudak, CEO of the Ontario Real Estate Association, says more needs to be done to protect consumers and punish agents found to have engaged in unethical behaviour.
Speaking in response to the Marketplace investigation, Hudak said the Real Estate and Business Brokers Act, 2002, needs updating.
"We'd like to see a new act. We need to take the legislation that governs the real estate industry and bring it into 2017. And part of that review should look at double-ending as a practice to make sure it's working," Hudak said.
"Those who abuse the rules, you've got to throw the book at them."
When agents use inside knowledge to tip the scales in favour of their clients, it's against the code of ethics established under the Real Estate and Business Brokers Act (REBBA), which requires that real estate agents act fairly and in the best interests of their clients.
In light of the Marketplace report, Kelvin Kucey, the deputy registrar of the Real Estate Council of Ontario (RECO), the regulating body responsible for agents operating in the province, said allegations of side deals and insider information are a cause for grave concern.
RECO released a statement saying it supported the provincial review of the "rules real estate agents are required to follow."
In another statement emailed to CBC Toronto, RECO said while it supports the goal of modernizing the rules to strengthen consumer protection and standards for real estate agents. it could not comment on its position on double-ending.
"In terms of the rules around multiple representation, in January 2017, RECO submitted recommendations to the Minister on how to further strengthen the consumer protection provisions. Because those are now being considered by government, we can't elaborate on them at this time," said the statement.
RECO emphasized that any rule changes should protect both buyers and sellers, be effective in any market conditions and work in all parts of the province.