Canadian real estate agents and brokerages are accused of working against their clients. Not by any hike either, but the complaints came from Ontario Real Estate Council (RECO). The provincial regulator wrote to the industry explaining that they had found clients to be directed based on commissions. This tactic means that some buyers may have bought real estate that was not in their best interest… but the agent still received a nice commission.
Canadian real estate agents found directing buyers to higher commission properties
RECO has stated that some agents and brokerages are “stepping” clients to higher commission houses. Piloting is the process of withholding information from a client, against their best interests. In this case, they allege that certain agents and brokerage houses referred people to certain properties on the basis of a commission. It may have pushed more buyers to the same home when better options were available. That’s one way to start a bidding war, eh?
“It has come to our attention that some real estate agents and brokerage firms in Ontario may direct their buying clients to listings where the seller offers buyers representatives higher commissions than those offering lower commissions,” said the Ontario regulatory body to local industry.
Adding, “we are concerned that this will happen without informed buyer’s instructions.” Maybe buyers just enthusiastically preferred the higher commission properties after finding out. A mystery for the ages, really.
Ontario warns that driving is illegal and may result in loss of your license
If you see something, say something… please? The regulator is asking industry to report this kind of behavior, if they are aware of it. They also remind them that fines can go up to $ 50,000 for an individual and $ 100,000 for a brokerage.
They warn, in extreme situations, that they will revoke the registration of the agent or broker. This would limit their ability to conduct future real estate transactions in the province. It’s probably a good idea to remind people of this, since the maximum fines are currently lower than a commission check in some areas of Ontario.
Agents are encouraged to explain their obligations to buyers
The regulator says there are a few things agents should point out to buyers to help them. Among the tips is the written confirmation of the details of the buyer’s criteria. They should also document how the agent will share rosters and commission structures.
If leadership is a problem, few people have been punished for it … at least so far
While this is a real problem, the regulator has yet to show much action. Only one enforcement action was taken by RECO in August – in total, for all complaints. It was also not clear if that involved leading. You have to go back a few months to see a penalty specifically for failure to disclose compensation. The email makes it look like they’re on their knees in the direction, but few public data points show that to be the case.
Having said that, they wouldn’t bring it to the attention of the industry if it wasn’t a problem. Regulators generally prefer not to allege that criminal activity is in progress if it is only one. However, they may be investigating these allegations. Or the claims can be very difficult to prove because customers don’t know when the information is withheld. It’s hard for consumers to know what data is missing in an industry known to restrict public access to data. Waiting for, Warning.
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