Just got an email about the new regulations coming down the pipe in BC for the real estate industry. If you recall, the industry lost the right to self-regulate last year after a lot of reports of consumer hostile behaviours by certain brokerages in the overheated Vancouver market. The Real Estate Council of BC was revamped with more outside members, and the Office of the Superintendent of Real Estate (OSRE) appointed to keep an eye on the industry moving forward. Since then they’ve tweaked the rules here and there, for example by making it marginally harder to pass the entrance exam for agents and by cranking up the maximum amount of penalties for misconduct by both licensees and brokerages. I’ve seen a few job postings for the OSRE that stated the goal was to implement the recommendations of the Independent Advisory Group report that was released last year. Well the next changes have been released in draft form and are:
- Removing limited dual agency in BC. This is where one agent represents both the buyer and the seller as clients in a transaction, with some restrictions. Some remote and underserved communities will be allowed to continue with this practice for now.
- Increasing required disclosure about commissions and representation to clients. Generally some minor tweaks to disclosure requirements to better inform clients about where their money is going, and what their relationship is with an agent they are dealing with. For example:
- In a listing agreement, it must be specified how much commission goes to the listing brokerage and how much to the cooperating (buyer’s agent’s) brokerage. Also it must be specified how much commission goes to he listing brokerage if the buyer is unrepresented.
- Before providing real estate services, an agent must disclose whether they are representing the party as a client (and therefore have a fiduciary duty towards them) and inform them how to file a complaint. This is very similar to the current Working with a Realtor brochure and will almost certainly result in a modified version of that document.
- Before dealing with an unrepresented client in a trade (for example if an agent has a listing and a buyer goes to them directly to write an offer on the property), the agent must explain the risks of dealing with someone that represents only the interests of the opposing party, and a recommendation to get their own professional advice.
- When a seller’s agent presents an offer to a seller, they must include detailed information about commission and other remuneration that they would receive if that offer were accepted.
My take: These are draft changes open to comment (provide feedback here) until Oct 6th, but I’ll bet they will essentially pass as written. Getting rid of limited dual agency is a no brainer and something we’ve seen coming for a long time. Given that an agent must act in the best interests of their client, it is obviously impossible to do that for two people with competing interests. The increased disclosure laws are relatively minor tweaks to existing requirements. Some additional transparency for consumers which is always good. I’m not convinced that the requirement to scare an unrepresented seller via warnings about the risks of being unrepresented is in the consumer’s interest, but certainly getting a lawyer to review an offer before making one is a very good idea.
Overall fairly minor changes that probably won’t have much of an impact on the market outside of turning up the general level of wailing and gnashing of teeth in the industry. I’m disappointed that they haven’t introduced the requirement for all offers to be recorded on a property to finally put an end to unverifiable competing offers that seem to appear at opportune times to goose a buyer. Maybe that is still to come. This is a start and it’s just another sign that the wild west era of speculation, lax regulations, and free money in real estate is slowly being unwound.