Lest there be any doubt about what impact their findings might have on skyrocketing home prices in Metro Vancouver, the authors of a damning new report on the regulation of the B.C. real estate industry spelled out its limitations in the clearest possible terms.
"It is important to understand that the recommendations of this report are unlikely to have a material effect on housing prices and issues of affordability," the panel's report read.
That is an indisputable fact. Nonetheless, the importance of the review, one largely prompted by Globe and Mail investigations of shady practices flourishing in a real-estate market gone mad, should not be lost here. The scope of the industry overhaul being recommended is larger than anyone anticipated. Certainly, it will be much harder now for the people capitalizing on fast, easy money to get away with the forms of fraud and malpractice they have been carrying out on unsuspecting consumers.
No aspect of industry regulation will not be affected by the report's recommendations should the government adopt them. (And it assuredly will.) Changes in everything from how agents are licensed to the fines they pay should they run afoul of the new rules will help transform an industry that has been operating by its own Wild West rules for the past decade.
Included in the report's 28 recommendations is one to end the practice of "double agency," in which a realtor represents both the buyer and seller in a single transaction. The obvious conflict inherent in that situation has been evident for years, and yet nothing was done about it because oversight of the industry has been a joke. As well, the report says realtors should have to register all offers on a home with the brokerage firm selling it. No longer would consumers have to take the word of an agent that X number of offers had been received, a figure that could be invented for reasons of financial self-interest.
Now, the public can go to the brokerage for verification.
The fines being recommended are serious – up to $250,000 for an agent, up to half a million dollars for a brokerage. Previously, the most an agent could be fined was $10,000, which some in the industry saw as the cost of doing business.
Perhaps best of all, the report recommends that the powers of real-estate boards to investigate complaints by the public be removed, with full authority for disciplinary matters shifting to the Real Estate Council of B.C. This is a positive suggestion, because the boards' interest in laying down the law with agents who ran afoul of industry rules was laughable. The record of the council in this regard was only slightly better, but I believe that will change given the unprecedented scrutiny the industry is under at the moment.
The fact remains that this report would not have happened without the role the media played in uncovering some of the more unsavoury practices of realtors doing business in this province. In fact, some of the more sleazy manoeuvres such as shadow flipping (selling a house to other buyers for a higher price unbeknownst to the seller before the original sale closes) were common knowledge in the business. Common knowledge and yet nothing was done about it until The Globe brought the practice to the public's attention earlier this year.
Carolyn Rogers, B.C.'s superintendent of real estate and leader of the panel that looked into the real estate industry mess in the province, deserves high marks for going as far as she did in this report. Some might say it was make-up on her part, given that regulation of the industry more broadly falls under the auspices of her agency, that she was asleep at the switch while a free-for-all was happening around her.
Regardless of your view, the fact is, she will leave a strong legacy of reform when the report's recommendations are adopted.
As for those hair-raising prices that are increasingly ending the home ownership dreams of a greater number of the middle class, they will not be altered one bit.
Gary Mason