UPCOMING CHANGES FOR CONSUMERS WHO ARE BUYING OR SELLING –
Mr. Michael Noseworthy, the Superintendent of Real Estate has given directions to the Real Estate Council of B.C. [RECBC] to implement changes that are supposedly for the protection of buyers and sellers. These changes are to be effective on March 15th, 2018.
We all know that Limited Dual Agency will be forbidden come March 15, 2018 as well. This means there is a ban on one REALTOR® representing a buyer and seller in the same transaction. Okay, we get it.
However, one of the major concerns to REALTORS® is the new rule with respect to what is called “double recusal”.
Recuse means “to remove oneself from participation to avoid a conflict of interest.”
Here is an example of how “double recusal” could apply if you are going to sell your house.
You, the sellers have decided on offering your home for sale with REALTOR® Mr. Agent. You interviewed three other REALTORS® and after serious consideration you selected Mr. Agent to represent you. Mr. Agent was highly recommended to you; has been in the profession for over 25 years, has a huge clientele base since his business is built on referrals from satisfied buyers and sellers and knows everything about the neighborhood where your home is located. He is perfect to represent you and you trust him.
You told Mr. Agent what you were hoping to sell your home for, you agreed to his marketing plan, you told him all your personal information, why you were selling and what you hoped to buy. You told Mr. Agent your mortgage amount owing and other confidential information. You chose Mr. Agent because of his ethics, his professionalism, his negotiating plan and abilities. You trusted Mr. Agent and wanted him to represent you in the sale of your most important asset, your home. You then asked Mr. Agent if he had any buyers in his clientele list that might be interested in buying their home. This is where the concern for the consumers comes into play. Mr. Agent tells the sellers that yes, in fact he does have a couple that he just sold their home and he also knows another buyer that might be really interested as well.
HERE IS WHERE THE PROBLEM EXISTS
Mr. Agent must tell the sellers that he cannot represent either of his possible buyers because he also knows all the buyer’s personal information. Remember, he also knows all your confidential information. It is called “double recusal” [avoiding a conflict of interest re confidentiality].
The new rules state that Mr. Agent cannot represent you as the sellers and the potential buyers he knows, because he has confidential information about both parties. He will however, recommend the buyers to another REALTOR® to represent them. This is all good unless these buyers really do want to make an offer on your home. They have seen many other houses for sale but now they love your home. They want their referred REALTOR® to make an offer on your property.
Here’s where it gets very complicated under the new rules and where you as sellers and/or buyers cannot choose your own representation for your real estate needs. You hired Mr. Agent to represent you with the most important and complex transaction of your life. The primary agency duties Mr. Agent must uphold always are: loyalty, avoiding conflicts of interest, full disclosure and confidentiality. The one duty that never expires is the continuing duty of confidentiality.
These new rules will take away the consumers choice of representation in the sale/purchase of their real estate. Because Mr. Agent knows you and your confidential information if the REALTOR® representing the buyers brings you an offer on your home — according to the new rules, there is the problem of a conflict of interest. Mr. Agent knows both parties confidential information.
The rules mean that when the Buyer’s REALTOR® presents an offer, Mr. Agent is required to step away from representing you, the sellers. That’s right; Mr. Agent cannot represent you the sellers because of the supposed conflict of interest. Is that allowing you the consumer, to choose who represents you?
Even if you as sellers signed a disclosure that Mr. Agent does have confidential information, but he will not share that with you the sellers; that will not be allowed. He would still not be able to represent you. Well, what if we even had the buyers sign they are okay with their referred REALTOR® representing them and to go ahead with Mr. Agent representing the sellers. No, this is still not allowed. So now you the sellers must wait until the Brokerage of Mr. Agent appoints another designated agent to step in for him.
Yes, you had hired Mr. Agent based on his knowledge, professionalism, ethics, recommendations, trustworthiness and most importantly on his negotiating skills to help bring you the highest offer possible. You have no option or choice of who can represent you if Mr. Agent also knows confidential information about a prospective buyer.
Did you know this was coming into effect March 15th, 2018?
How do you feel about not having your own choice of who works for you when you are buying or selling?
The new rules are stating that you the sellers who hired Mr. Agent will now have to change to another REALTOR® who you do not know – how are their negotiating skills, what do they know about you and your concerns. This is the most critical negotiation of your lifetime and you cannot have the REALTOR® you originally contracted with look after your needs, negotiate on your behalf and explain step by step what is involved. If there are subjects Mr. Agent won’t be allowed to advise you on their validity in the sale of your home; the length of time allowed for the subject removal, the date of closing [the day you get paid] – does it meet your needs and is there enough time between being paid and moving out to allow you to pay for the new home you are purchasing. What if there is an unauthorized suite that needs to be disclosed properly to protect both the sellers and buyers – does this new ‘fill-in’ agent know all about this?
Sure, let’s just change your representative in the middle of the most critical part of selling your home.
Demanding Mr. Agent step aside from the negotiations because he may know some ‘confidential’ information about the buyers is a total disservice to you. This newly appointed REALTOR® most likely knows nothing about the listing information and nothing about you the sellers – how is that protecting you? Who is looking after you – you chose Mr. Agent to represent and protect you throughout the sale of your property but due to the new rules you have absolutely NO CHOICE in the matter?
How is this fair to any members of the public?
This proposed new rule being brought down by the Superintendent of Real Estate and implemented by the Real Estate Council of B.C. eliminates the public’s choice of representation. Are you okay with it?
Please voice your comments/questions/concerns to the following regulatory bodies.
RealEstate@gov.bc.ca ATTENTION: MR. MICHAEL NOSEWORTHY