Update June 29th: Looks like the province agrees with the assessment that industry self regulation is fundamentally untenable no matter how we tweak the rules. Great news for real estate progress in BC!
“The real estate sector has had had 10 years to get it right on self regulation and they haven’t” – CBC News
There’s a report out by the Independent Advisory Group (IAG) appointed by the Real Estate Council to look into licensee misconduct and to try to put some public faith back into the real estate industry. The Real Estate Council is the body that regulates real estate activities in BC. Thanks to Hawk for posting the report.
The report itself is a pretty good overview of the issues facing the industry and the reasons why enforcement is not up to snuff. However most of the recommendations I find are of the finger wagging variety and will not lead to any change because of the existing conflict of interest. Yes registering complaints should be easier, there should be more transparency, the code of ethics should be consolidated, and fines should be higher, but all of those will be watered down in implementation as long as the industry is the regulator. How hard are they going to work to crack down on the members that pay their bills?
Of the 28 recommendations, the following could perhaps amount to more than handwaving:
- No more dual agency (Realtor representing buyer and seller). It’s about time. There are 22,000 realtors in BC so it shouldn’t be hard to find one to take some free money. It’s pure self-interest that allowed an agent to represent both ends of the deal. The IAG weaseled out of recommending to ban double ending (realtor collecting the buyer’s agent commission when the buyer is not represented) which I think is unconscionable. If the buyer has no agent that part of the commission should obviously be returned to the seller.
- All offers need to be recorded with the managing broker. No more mysterious “other offers” or offers withheld from the seller. While this recommendation is practically unenforceable, the IAG makes a more interesting one which is to implement a real-time multiple offer registry where buyers can monitor, with appropriate privacy protections, all offers that are made on the property. That would also put an end to the crazy overbids we are seeing by buyers desperate to secure a property against unknown competition.
- Increase penalties from a max of $10,000 to $250,000 for individual agents. A big jump, but maximum penalties don’t mean anything if the regulator is unwilling to assign them.
- Governing body needs to be at least 50% non-industry members. I’d say 75% would be better, but currently it’s 80% industry so no surprise we’re in the mess we’re in.
I did enjoy the last recommendation, which is that the Real Estate Council employ some professional communications people (aka spin doctors) in order to restore public confidence.
Fundamentally the issue is that you can’t expect an entire industry to maintain professional behaviour when the bar is set so low. In 10 weeks and change you can become a real estate agent in BC and the industry then tries to hold you to a professional standard on par with doctors and lawyers that have taken near 10 years of schooling to get there. It just doesn’t work like that.
The report says that “A self-regulatory regime works when members of the profession hold themselves and each other to an ethical standard that is higher than anyone else does”. Does the council really think someone that has spent $1000 on an online course is going to feel compelled to do that? It should be in the interest of all good realtors to pressure their industry towards reform before that reform is forced on them. The rewards are high and the barriers are low, and that imbalance will have to be corrected before we see any meaningful change in the industry.