Local realtors and the BC Northern Real Estate Board want consumers to be aware of new rules set to take effect on March 15 that they say will heavily impact consumers in rural areas.
The rules, first announced by the Superintendent of Real Estate on Nov. 15, will prohibit dual agency (the practice of acting on behalf of both the buyer and seller) as well as requiring enhanced disclosure on remuneration between brokerages, informing consumers on duties to clients and unrepresented parties before working with consumers and warning consumers of risks if the licensee is already representing another party to the transaction.
The rules came under discussion after a report and recommendations were received from the Independent Advisory Group on Real Estate Regulation in B.C. in June 2016.
100 Mile House Royal LePage owner and managing broker Wayne Walker says he’s concerned how the changes will restrict the rights of sellers and buyers.
“I’m not against change but I have to wonder if the public has any idea of the actual extent and depth of these changes and how they will negatively affect not only realtors but buyers and sellers rights as well. It’s truly frightening.”
Before the pendulum didn’t swing far enough but after March 15 it’s totally out of control, he says.
“A happy medium would’ve been the answer,” he says. “From the scenarios I’ve read and some of these proposed changes, I actually think the public will be unpleasantly surprised.”
100 Mile House RE/MAX owner David Jurek echoes that sentiment.
“The consumer won’t necessarily be able to choose who their realtor is gonna be. And in some cases, the realtor that’s representing them that has their house listed may be forced to step aside and have somebody else deal with them at the time of an offer,” he says. “There might be a conflict because whoever’s bringing the offer may have been their client once upon a time.”
They may be forced to deal with someone they do not trust or like or know, he says, adding that it’s not really protecting the consumer if the realtor they’ve hired suddenly needs to step aside because they know too much about the buyer.
While it is going to change how people have to operate and that there is going to be some inconvenience, says Mykle Ludvigsen, a spokesperson for the Office of the Superintendent of Real Estate, at the end of the day it’s for protection and the need for consumer protection isn’t any less in rural areas.
“Our job is here to make sure that people that have representation when they’re buying and selling something worth so much money, that they are fairly and properly represented and that is always our focus. We’re here to serve the public and not the industry. We talk closely with them to make sure we get it right but at the end of the day our job is to protect consumers.”
The new rules could result in a realtor that people have known and trusted for years having to reject their business if they have a buyer client that is possibly interested in your home, says President of the Northern Real Estate Board John Evans. They also won’t be able to give you advice as they would be in conflict, he adds.
“This is a loss of consumer choice,” he says. “Imagine taking a transfer to one of these small communities but you cannot find a local agent to represent you as a buyer’s agent because they all have agency relationships with sellers. Will you use the services of an out of town agent that is not familiar with the area, does not have any local market knowledge, does not know where the latest grow-op home was?”
These are the types of services realtors have provided that may not be available in smaller communities in the next few years, he says.
“The loss of dual agency will restrict the services that we can provide to the consumer. I’m sorry sir, I cannot show you homes. I’m sorry Ma’am, I cannot help you with your high assessment. I’m sorry you two, despite the fact that you are good friends and going through a divorce I cannot help you determine the value of your home. I’m sorry, I can put my sign on your lawn but I can’t sell your home to any of my former clients.”
There is room for exceptions in very rural areas, where getting another realtor is almost impossible but it’s up to the Real Estate Council of British Columbia to determine how to apply that rule, says Ludvigsen.
“The real estate agent isn’t the product. The home you’re trying to buy is the product. Our perspective is that you’re trying to buy a home and you’re having someone to help you do that and that person needs to be 100 per cent. Your fiduciary duty as a real estate licensee is to your client and that’s what this is designed to do.”
The new regulations are very similar to other professions such as a lawyer where you can’t use the lawyer representing the opposition, he says.
Evans, however, doesn’t see it that way.
“It is not the same as acting as both the defence lawyer and the prosecuting lawyer representing the same client. Think of the agent as a mediator to the transaction when both parties have a common goal – one wants to buy and the other wants to sell – it is quite simple. For those of you that have dealt with a divorce mediator in the past, you will understand what I mean.”
While it will change the way things are done, the market will adjust, says Ludvigsen.
“There are 35,000 realtors in the province of B.C. and I’m certain that they will find a way to manage this.”
Evans says he is worried that in addition to decreasing consumer choice it will mean lower quality service.
“Agents who have grown up in these small communities will have conflicts everywhere they look. Will these small offices have to shut down based on the fact that they are simply unable to provide services based on strict guidelines to avoid conflict? They likely will,” he says. “In the end, small offices will be absorbed by the larger offices. More agents will be providing services in underserviced areas despite the fact that they have no knowledge of the local area. Services that have been provided by local agents will all but disappear.”