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B.C. realtors' group criticizes proposed ban on dual agency

Sam Cooper

A for sale sign hangs from one point and twists in the wind. (Gerry Kahrmann/Postmedia Network files)

A for sale sign hangs from one point and twists in the wind. (Gerry Kahrmann/Postmedia Network files)

The B.C. Real Estate Association is pushing back against a proposed ban on the controversial practice of allowing realtors to represent both sellers and buyers of a property.

The proposed ban on dual agency — also known as double-ending — is the most significant change among a number of rules proposed Wednesday by the B.C. government's Office of the Superintendent of Real Estate. The draft rule changes, meant to protect consumers and improve transparency in B.C.'s red-hot real estate market, have been provided to realtors and the public for comment over the next month.

Dual agency has been restricted or banned in some U.S. states, and Ontario has also proposed a ban on it.

In an interview on Thursday, the B.C. Real Estate Association's CEO, Robert Laing, said realtors worry that banning dual agency will hurt both consumers and realtors.

"Our biggest concern is the consumer's right to make a choice about who they work with is being taken away from them," Laing said. "The superintendent is trying to protect the consumers, but we think he is forgetting that in a free-enterprise market the consumer needs choice."

The association, which represents and lobbies for realtors, said in a statement: "The vast majority of B.C.'s more than 22,000 licensees are diligent, ethical and trustworthy, and so BCREA has recommended that limited dual agency should be allowed through the express consent of consumers."

The draft rules were based on recommendations from the report of an independent advisory panel released last year to address problems in B.C.’s real estate industry. Those problems included a few realtors putting their own interests ahead of clients, some not abiding by rules around reporting requirements to prevent money laundering, and realtors failing to disclose assignment of contracts (known as shadow flipping).

An exception to the dual agency ban would be if the deal occurs in a remote area of B.C. with limited access to realtors.

Ron Usher, a lawyer and member of that panel, said dual agency is a "nuanced" issue and Superintendent Michael Noseworthy apparently understands the panel's view.

"The proposed rule seems to be in line with the (panel's) recommendations and my own appreciation that there needed to be some accommodation for rural areas," Usher said Thursday.

In his draft document on the dual agency ban, Noseworthy defined the practice as typically occurring "when a licensee represents both a buyer and seller, or two or more competing buyers, in a transaction."

Critics say dual agency opens the door to conflicts of interest and self-dealing for agents, because it is very difficult to represent both the interests of the buyer and seller in a competitive transaction.

However, industry advocates argue transactions can be balanced by ethical realtors.

For example, Laing said, the proposed ban means that if a client has developed a relationship of trust with a realtor who is listing a property for sale, the client could not hire that agent as a representative to buy the property.

One veteran Metro Vancouver realtor, who did not want to be named for fear of backlash, said if dual agency is eliminated under-educated clients will still be taken advantage of. He said many people fail to understand the contractual protections that agents should be offering them, and “just sign wherever they are told to."

"Eliminating dual agency, in my opinion, will put buyers at risk of having no agency," the realtor said.

Another proposed rule change requires disclosure of commission sharing. Currently, a realtor must disclose how much commission they will earn on a sale. But under the new rules, the realtor must also say how, if at all, that commission will be shared with another realtor.

That seller could then use that information to renegotiate the contract with their realtor before signing the deal.

"The other draft rules deal with full disclosure and as a professional association we fully support that,” Laing said, "because it enhances the feeling of safety the consumer has."

Laing said it is difficult to know whether a ban on dual agency will change the dynamics of B.C.'s real estate market, but he believes government intervention is generally on the rise.

"All three levels of government are inserting themselves into the real estate market, and it doesn't take a lot of tinkering with rules and interest rates to have a dramatic effect," he said.

scooper@postmedia.com