BC Realtors: Can No Longer Act as Buying and Selling Agents
In an effort to cool certain practices and be more transparent in the hot BC real estate market the government has proposed new changes to how Realtors can operate. The Office of the Superintendent of Real Estate has decided that agents can no longer act as a buying and selling agent for a client - “A brokerage must not engage in dual agency.” An agent will not be able to represent the seller and the buyer in what is known as double-ending. The practice can come across as unethical as the agent stands to make more in commission and it can also prevent competing offers from making it to the table.
Assignment clauses, better known as ‘Shadow Flipping’ are another big reason for the changes. An assignment clause is a provision in some contracts that allowed a buyer to resell and property before the deal’s closing date. The clause was intended to give buyers a legal way out of a sale if their circumstances changed without risk of losing their deposit. It also protected sellers by ensuring a sale went forward either way.
Agents who took advantage of the clause could profit every time they ‘flipped’ a home, several times in some cases, for increasingly higher prices and often without the homeowner’s knowledge. Critics argue that this practice was partly responsible for the increase in property values in Vancouver. For those trying to enter the housing market, the questionable practice eroded a lot of public trust. Removing the double-ending aspect should do away with shadow flipping.
But there are issues to the change. While it may make consumers feel more protected, the BC Real Estate Association (BCREA) says it’s the wrong move. It claims only 5% of realtors in BC are responsible for the shadow flipping issue and it would take away a consumer’s right to chose who they work with.
Robert Laing is CEO of BCREA and tells CBC News that homeowners should have the right to decide who represents them.
"We're not happy with the changes," said Laing. "We take the position that consumers should be able to choose who they wish to represent them in real estate transactions. What this rule is doing is taking that choice away."
Other experts feel removing the double-ending process will negate some legitimate transactions already in progress. UBC Economist, Tom Davidoff says tougher, mandatory disclosure might be the way to go.
The changes are not expected to be enforced until January 15th, 2018. The rules are not expected to be applied in remote areas of the province where fewer realtors operate.