Buying a house is almost always the biggest investment of a lifetime. We hire real estate agents because we want the best deal possible, and we want the process to go smoothly. But what if it turns out your agent has been acting in his own interests, rather than yours?
This happened to a couple who purchased a condo in Vancouver in the spring of 2012. Shortly after the deal closed, they found out they had paid $11,000 more than they needed to. The buyers filed a complaint with the Real Estate Council of British Columbia (RECBC), the provincial regulator that disciplines real estate licensees.
This week, that agent was added to the list of names on the RECBC's website where disciplinary decisions made against agents are summarized. Other than those in the industry, few people know that the list exists.
"I want people to know," says the buyer, who filed the complaint. "I think the unethical ones prey on people's lack of understanding of the system."
The buyer didn't want to be named because she has a public profile in Vancouver, so we'll call her Gillian.
Gillian and her husband had many reasons to trust real estate agent Charles Bilash. Many times, they had used him to buy and sell properties. Members of Gillian's family had also hired him.
In March, 2012, the couple found a condo listed for $969,000. They told the agent to place an offer of $940,000. He placed the offer, but without telling his clients, he included a 3-per-cent commission on the entire amount for himself. This is a much higher commission than usual. A buyer's agent typically receives a commission of around 3.125 per cent on the first $100,000, then 1.1625 per cent on the remainder.
The sellers turned down the offer, and made a counter offer for $958,000. According to documents, they included a letter from their agent that said, "[the sellers] did not accept your request for an increased commission and feel that we are being compensated fairly (which I have to agree)."
However, Mr. Bilash did not present Gillian and her husband with the counter offer of $958,000. Instead, he advised them to pay the full asking price of $969,000, with a 2.39-per-cent commission for himself, according to the consent order. The sellers accepted the offer, including the high commission. The sale completed on April 30, 2012.
But the transaction didn't sit well with the sellers, because, of course, why would a buyer come back with a higher amount? It made no sense. The buyer could not have seen their counter offer. As well, the deal gave the buyer's agent a commission of $23,019 and the seller's agent a commission of $11,525 – a major difference.
The sellers waited until the completion date and then had their lawyer inform Gillian's lawyer that something strange had gone on.
"They put on their detective hats and solved the mystery for us," Gillian says. "They saved all of the e-mail trails and documentation so that we could go after this guy."
When confronted, Mr. Bilash immediately apologized and claimed full responsibility for his actions, according to consent order documents. But it took more than two years for the council to make a disciplinary decision after Gillian filed her complaint, in May, 2012. On Wednesday, the agent began a 60-day suspension, during which he can't work as a real estate agent or contact his clients. Because it's a suspension, it also means the decision stays online for five years.
He was also fined $2,500, ordered to take a remedial real estate course and pay $1,250 in expenses.
It's a "buyer beware" lesson for anyone who purchases a property. Consumers need to read the fine print, understand how commissions work and ask questions before they sign on the dotted line. Don't assume every commission is the same. Get references before going with an agent. Check the RECBC website to see if they have a disciplinary record. There are also websites that offer consumer reviews.
"It's a good idea to get references and testimonials," says real estate agent Paul Albrighton, who has since worked for Gillian. "You can ask for references from the last three dealings the Realtor has had. Any good Realtor would give you those. It's worthwhile to do a little extra due diligence."
Gillian says the experience has taught her to do her homework.
"I'm hoping my story will prevent it from happening to other folks," she says. "If I can get people thinking critically about Realtors, and looking at the [RECBC] website, hopefully, it will stick in people's minds next time."
RECBC manager of compliance, Maureen Coleman, adds that it's a rare case, and it's definitely not the worst case she's seen. Last year, there were suspensions of 120 and 150 days. If the public interest is at risk, the RECBC can issue an emergency suspension. Three emergency suspensions were issued in 2014, and one agent lost their license.
As well, there are about 11,000 licensed agents in Vancouver and 21,000 in the province. Those agents completed 84,000 real estate transactions in B.C. last year. Of those, the RECBC received 413 written complaints, and the majority of those were minor.
"A lot of them were because the licensee didn't return a call or take their shoes off when they came into the house," Ms. Coleman says. "It goes from really minor, to really serious."
Real estate lawyer Jennifer Neville couldn't comment on any one case, but she says that personal benefit is "quite unusual."
"Failure to communicate an offer is one of the most egregious breaches that I've ever seen," she says. "More often than not, you see miscommunication [cases]."
For his part, Mr. Bilash says he has "huge regrets and huge remorse" about the ordeal.
"I have a long-standing career. I'm a huge advocate of compliance. I had a glitch in my career. I simply failed to pay proper, detailed attention, as I should have in the whole matter.
"To this day, I constantly think about it and feel so bad because she was such a great client. It was a complete error," he says.
Ms. Coleman says that the embarrassment and stress of an investigation and ruling are more effective disincentive than the fines.
"One of the things that licensees always try to negotiate is they will accept any kind of discipline, but they do not want to be published. But happily, our legislation requires that we publish discipline.
"In publishing, we hope that it acts as a learning lesson for others, that there are absolutely serious consequences if they engage in this type of conduct."
While some agents think the fines should be higher, most believe the system is working to prevent bad behaviour. The provincially regulated RECBC surveyed its licensees in 2013, asking them how they felt about disciplinary penalties in relation to wrongdoing. Only 20 per cent felt they weren't severe enough. The majority either thought they were appropriate, or had no opinion.
"I do trust them [RECBC] and I think they are generally good about guidelines and rules," Mr. Albrighton says.
"When it comes to presenting offers, you have to have your senses full on. It's a pretty important practice, and holding up your ethics is probably your top priority. No one wants to have their name published. It's pretty terrible."
Gillian thinks the RECBC decision was fair. She and her husband also received a satisfactory undisclosed settlement from the agent's brokerage, in 2012. On top of the $11,000 difference between their offer and the counter-offer, they claimed losses for additional mortgage interest and property tax.
But the ordeal cast a shadow over the condo, so they sold less than a year later. They've gone on to purchase a house, without using an agent. She says her lawyer made the paperwork seamless.
"The bright side of the story is we did end up working with a new Realtor when we sold the unit, and my faith in Realtors has been restored," she says.
"Subsequent transactions have been far less painful."