Ontario’s Minister of Government and Community Service says he has no preconditions for the public consultations on the real estate industry practices he announced last week, but is guided by a desire to bring fairness to the market.
In making the announcement, aimed at “modernizing” the laws that regulate real estate professionals in Ontario, Bill Walker, MPP for Bruce-Grey-Owen Sound said he wants to listen. “Rather than us trying to pretend in an ivory tower that we know what’s best in the world, we want to go out to homeowners, renters, real estate professionals – anyone who feels they have a stake in the real estate industry – and really hear from them,” Mr. Walker said in an interview.
The government release issued Thursday specifically mentioned multiple-bid rules. Currently in Ontario, a broker representing a seller can only disclose the number of competing offers on the property to every person who has made an offer – but cannot disclose the competing price. When asked about this system, Mr. Walker suggested the government was looking for fairness in the market. “My approach to anything – both as an individual and as an elected representative – is you want to have balance; you want not to give one an unfair favour. You want to make sure it’s fair, it’s efficient and it’s modern.”
While industry professionals are eager to continue the process of updating the Real Estate and Business Brokers Act (REBBA), 2002 – which began in 2017 under Kathleen Wynne’s Liberals – there is some divide over whether multiple bids should or could be made “fair” to both parties.
“These reforms are a result of the lack of transparency in the multiple bidding process and it’s about time,” said Desmond Brown, salesperson with Royal Lepage Estate Brokerage in Toronto. "It’s completely blind. We’re seeing situations where people are paying hundreds of thousands more than the next highest bid. It’s not just a lack of transparency in knowing what the other offers are, there’s a lack of transparency with the bidders … certain agents who have lied about the number of offers that there may be [in order to] mislead the public.”
Options for change include mandatory registration of bidders (currently, buyers' representatives are often not able to confirm in real time if there are truly other bidders), and even disclosing bid details to other bidders.
Tim Hudak, former Progressive-Conservative leader and long-time MPP who was appointed chief executive of the Ontario Real Estate Association (OREA) in 2016, balks at the idea of upending the existing model in favour of something more like an open auction, out of concern it could harm the seller’s ability to extract the highest price.
“The homeowner owns the home. She should be able to determine how to sell that home,” he said. "You have to be very careful if you change the model not to undermine the deal they’ve made: that they’ve invested in their home, and when they retire or want to pass on the benefits to the grandkids that they get good value for their home. You want to make sure that if you’re making a fundamental change like that you get it right.”
Von Palmer, chief communications and government affairs officer with the Toronto Real Estate Board, agrees that sellers and buyers should all have the option to keep things as they are with blind auction multiple bids if all parties can’t agree on disclosure, while acknowledging there is impetus for change. “We’re getting pressure from the public, we need to legislate. With the status quo, you always have that debate about conflict … and you can’t deny people might have a point,” he said.
Mr. Palmer also said buyers should be worried about tipping off competing buyers about how much they are willing to pay. “If I’m going into negotiations and if I overbid for a property and I win, that was my call. No one forced me to do that. That’s a risk that I take.”
Mr. Hudak said he is glad to see his former Queen’s Park colleagues have taken note of OREA’s various REBBA reform white papers: “We made 37 recommendations for higher professional standards, stricter discipline, better education … and pretty much across the board the Ford government has included our recommendations,” Mr. Hudak said. “Clearly, they’ve listened.”
And TREB and OREA are in lockstep on a number of proposals, including hopes the government will allow real estate agents to personally incorporate – a personal tax-saving measure that six other provinces allow for realtors – and there’s also some interest in granting more power to the real estate regulator to oversee the industry.
“Our discipline committee doesn’t have the ability to suspend or revoke licences," said Joseph Richer, registrar of the Real Estate Council of Ontario (RECO). “If we want to get a suspension, we have to make a proposal to a different tribunal [the licence-appeal tribunal].”
In most years, RECO publishes only a couple dozen disciplinary decisions a year, from a pool of tens of thousands of realtors. “We take a progressive approach to discipline; on a first offence, if it’s not egregious conduct, we may not go to discipline, maybe just a warning or requirement to do training,” Mr. Richer said. Even though maximum fines were doubled to $50,000 for a realtor and $200,000 for a brokerage in 2017, RECO’s process can take a year for a hearing, which means almost every decision in 2018 began under the previous fine regime (topping out at $25,000).
For example, in 2018 only two cases were published in which fines reached $20,000, both of which represent financial and ethical mismanagement. That said, disciplinary findings were up for the year over all, according to Mr. Richer: “The number in 2018 is quite substantial, quite a bit higher in 2017.”
There are other subjects under consideration in consultation, including questions about preselling new homes and condos, where currently no realtor’s licence is required. Mr. Palmer says TREB will be issuing suggestions on what kind of feedback its 53,000 members (who form a supermajority of Ontario’s 82,000 realtors) should submit to the government.
Mr. Walker said numbers will matter when it comes to how he will evaluate the feedback: “If someone calls me about an isolated issue, but then 100 people are telling me this is an issue, then typically I put my energy into that 100 people … because that’s what’s coming back at you,” he said.
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