Changes coming to BC real estate industry
Mortgage Broker News
British Columbia real estate has been making headlines for the past few years, due mostly to the seemingly endless price growth in its largest city, Vancouver. But it’s another – somewhat related – story that has caught the eyes of mortgage brokers and other industry professionals alike: A report from an independent panel charged with reviewing the province’s real estate industry has led to the end of the industry’s self-regulation.
It’s a move that Premier Christy Clark said is aimed at protecting consumers. Clark has announced that the province will hire a new superintendent of real estate to take over the BC Real Estate Council’s rulemaking authority.
Clark’s announcement was prompted by the report from the independent advisory group, which was tasked with restoring consumer confidence in the real estate industry. The group made 28 recommendations for doing so, including levying sizable fines for misconduct.
According to Clark, the government plans to implement many of the report’s recommendations, in addition to replacing a majority of the members on the BC Real Estate Council with people from outside of the industry. But how much of a difference will the changes really make?
“I don’t really see any fundamental change, ultimately,” says Dustan Woodhouse, a BC-based mortgage broker. “Whether you’re self-regulated or regulated by an outside party, I think the challenge is the outside party sometimes has a more difficult time putting their finger on issues. On the other side, when you’re self-regulated, the thought is you may not be doing enough. Will a government regulator take more action? Maybe – time will tell.”
According to Woodhouse, self-regulation in other industries has resulted in greater disciplinary measures. He also argues this change will not have any major impact on housing prices, which continue to be one of the major concerns for those in Canada’s westernmost province.
For its part, the British Columbia Real Estate Association says it welcomes the change. “The vast majority of the 20,000 Realtors in BC do the right thing, and we welcome a dedicated superintendent of real estate to improve consumer protection in real estate transactions,” says British Columbia Real Estate Association president Deanna Horn. “Our livelihoods depend on our reputations, and I know that almost every Realtor in the province will be happy to see stronger penalties and enforcement for rule-breakers.”
That’s an assessment Woodhouse agrees with. “I would also say the overwhelming majority of Realtors are all hard-working honest people who want to do right by their clients,” he says. “Real estate is just like every other industry in our country. There’s a certain proportion of bad apples in every barrel. It’s good they are trying to more aggressively weed them out.”
The one major change to come out of the independent review was the promise to crack down on dual agency – or the practice of one agent representing both the buyer and the seller in a transaction. In Woodhouse’s view, that’s a positive and necessary change.
“I say to clients all the time, this is like you walking into a courtroom to do litigious battle with somebody, and you’re going to use their lawyer to represent you,” he says. “I would suggest a skilled buyer’s agent would negotiate either a better price or more favourable conditions or ask questions that the novice buyer will not even know to ask that will far outweigh the half a commission that a dual agency commission might be kicked back to a buyer.”
A dual-agency Realtor is beholden to the seller, he adds. “At the end of the day, that’s who’s paying the bill. The seller is the one who is paying the Realtor. And the Realtor can’t truly negotiate on a buyer’s behalf while simultaneously negotiating for the highest possible price. How can one person wear both those hats? It’s fundamentally not possible.”
Still, despite the changes, Woodhouse believes agents will still be unfairly shouldered with some of the blame for what’s going on with prices in Vancouver.
“I think the bigger challenge, right now, is it’s all about optics,” he says. “There seems to be the suggestion that Realtors have played a role in driving house prices up. How? The agents didn’t control the market rising. Real estate agents don’t have some dark magic that allows them to increase the price of homes; the market controls the value of property.”
Copyright © 2016 Key Media Pty Ltd