Thursday, May 9, 2024

Focusing only on the present, we all tend to see just the things in view, like good behaviour and good business practices. And bad behaviour and bad business practices. We hear complaints more often than compliments, so it isn’t surprising that we tend to think only of what needs fixing first before thinking about what we’ve already fixed or what seems to be working well. This will never change. But thinking positively has its benefits. It’s easier to fix things with a positive attitude, flavoured with a bit of history, than it is to think, “it can’t be done.” 

For example, think about the 100,000 or so BC properties bought and sold on the MLS® system, year after year.  

This number can fluctuate as much as 20 per cent. But even so, a lot of transactions are facilitated each year for buyers and sellers by BC’s 25,000 REALTORS®. Being able to help 100,000 home buyers and sellers solve their housing needs isn’t a small thing.  

Think about everything that had to get done for these folks to get to their destination: First, setting up a system so buyers and sellers can easily find real estate–related information, namely, our MLS® system. Then, putting in place 25,000 licensed and insured individuals with the necessary expertise to stickhandle the process all the way to a successful conclusion. Plus, building a regulatory regime to ensure the public is protected, including establishing our errors and omissions liability insurance, and a Special Compensation Fund to protect buyers’ deposits. 

There’s more. 

We’ve established a comprehensive system of professional development, and the regulator has built its own relicensing education program. To ensure new Realtors aren’t unleashed without at least some skills training, we have the Applied Practice course (or whatever it’s now called).

"These are big accomplishments. They speak to our profession’s longtime support of learning standards that improve professionalism. There’s more work to do, and we’ll be focusing on that forever, probably."

When I began my lifelong real estate journey, I thought I was a salesman. That’s what I’d been told. All the training I was given, after successfully completing the real estate agent licensing course, pretty much focused on something called “closing skills”; namely, how to get someone to scrawl their signature on a contract, what to say if they didn’t want to, and how to gently convince them that making a decision was much better than not making one at all.  

Buyers and sellers were seen as people to sign up. To get on paper. To corral into agreeing to something, like a listing contract or a contract of purchase and sale (called an Interim Agreement back then). 

It wasn’t till 1990, 10 years later, and four years after I’d become a branch manager at a 40-person real estate brokerage, that I began to realize we were agents, not salespeople. I’m almost embarrassed to admit it now. Imagine being in a business for 10 years before having an epiphany that goes to the heart of who we are! I must’ve been a slow learner. 

A year or two later, I remember being incredulous when I learned about an Ontario agency court case. You see, back then, there was no designated agency or assumed buyer agency. We had sub-agency, larded over with what was probably dual agency. None of us realized the danger until that court case. Comfort zones sometimes do that. It could be said that we were all asleep at the switch, as they say.

"In a nutshell, what happened was that the MLS® listing contract parties were the seller and brokerage (which is still the case). But back then, the Realtors in that brokerage were all employees rather than being independent contractors."

There’s more. The listing contract made the “buyer’s Realtor” a sub-agent of the seller’s brokerage. Imagine that. By contract, everyone was working for the seller. The buyer wasn’t represented. Buyers likely didn’t understand this, and why should they have? We didn’t seem to either.  

For the weeks we drove buyers around on tours of houses they wanted to see, we listened to their stories and digested all the personal information they gave us, including what they’d pay for a property, how much they liked a property, and how much they wanted it. But the commercial reality of the situation was that, until that Ontario case came along, the buyers thought they were represented. That’s when things changed, and  our profession took prompt, direct action to fix the issue. 

I was on the Board’s Presidential Agency Task Force charged with the responsibility of making recommendations to our directors to fix the mess. BCREA had a parallel task force. Thank goodness we were so well advised by our lawyers and the dedicated members of that group.  

It was from our task force’s recommendations (and with the help of lawyer Brian Taylor), that the “assumed buyer agency” system was established, meaning, “if you’re working with a buyer everyone assumes that you’re the agent for that buyer, unless you declare otherwise.”  

Also established was limited dual agency, meaning, “I’m working for both the buyer and seller, who have consented in advance to me acting for both as long as I treat each one impartially and don’t reveal their personal information to the other party.”  

The new system also allowed us to become sub-agents if the seller’s brokerage agreed to it. But, in my experience, there were very few takers. During that period, we had a multitude of forms, including sub-agency, limited dual agency, no agency, and heaven knows how many others. 

I remember thinking I’d educated everyone in my office on the correct use of the forms and all things agency—until Nancy, a member of my office, walked through my door saying, “I sold a place. Hooray for me!” So, I hoorayed her back and then looked at the file she’d given me. She’d filled in, and had her buyer sign, every single agency form. In effect she had said, “I’m your agent.” “I’m a limited dual agent.” “I’m not your agent, you’re unrepresented,” and “I’m a sub-agent.” I asked her about it. She threw up her hands and said, “Listen, I don’t understand which form is which. All I know is that I have a willing buyer. You pick the form that fits and throw the others away.”

Oh dear. Pride punctured.

The Board established a comprehensive training regime to indoctrinate members about the new system. I was one of the trainers. I remember long, raucous meetings held at the Italian Cultural Centre and other places. Most members went along as they usually do, probably thinking, “let’s just get this over with and check that box so I can get on trying to make a living.” Others didn’t go along quietly, but eventually, our new system took root and, dare I say, flourished. 

Until the next epiphany. Remember what I said about the brokerage being a party to the listing contract? Keep that in mind for a moment. In those days, the managing broker was the “agent” by contract for all the people with whom the brokerages’ Realtors were working. Remember, there were a lot of employees back then, so maybe that made sense. There were also independent contractors, which made things a little weird. That’s a Pandora’s box I won’t open here.

"Imagine this: if you’re the managing broker and agent for all the buyers and sellers with whom your Realtors are working, is it possible that now and then you’d be in a conflict of interest?"

Yes. But we didn’t understand that, so we slept well at night. How bad, potentially, were those conflicts? Some of us will remember what we used to say when introducing a new listing at the weekly office sales meeting. For example, “Listen, bring your buyers. There’s a deal waiting to happen here. The sellers really have to sell—they’ve got an accepted offer on a place.” Or, “The sellers are getting divorced; they really need to sell.” Or, “My seller isn’t motivated, but maybe they’ll bring the price down.” Kryptonite if the broker is the agent for the brokerage. As I said, back then, we weren’t really in tune with agency. It was still an “us versus them” mentality—not a great vibe for a profession.  

Now let’s get back to the managing broker conflict situation: it was scary, even though we didn’t realize it at the time. A big concern for anyone understanding agency was that the managing broker was being put in harm’s way on a daily basis by something called “attributed knowledge.”  

What’s that, you ask? Every piece of personal information a buyer or seller revealed to their Realtor was automatically deemed to also be known by the brokerage’s agent; namely, the managing broker, even if they hadn’t actually heard what had been said. That meant there was a risk that any time two Realtors from the same brokerage were working to buy or sell an office listing, the managing broker was put into a potential conflict. 

When this problem was noticed, we put together yet another task force. I think I was on that one too, but it’s all blurring together now. The task force recommendations were that the managing broker should stop being the agent for everyone and that each Realtor should be the designated agent for their own clients. With the managing broker being agent for no one, each Realtor acted for their client and didn’t share information. There were no more office meetings where a Realtor said, “Bring your offers, my sellers are desperate.” Eminently logical. I wonder why we didn’t think of it before. 

Alongside of all that, the Board put together a task force, probably with BCREA, to work with our Real Estate Errors and Omissions Insurance Corporation to deal with one of the biggest risks Realtors face: being accused of misrepresenting property information.

"It was the early 90s, I think. What can I tell you; I had a young family at the time and it’s all hazy now. But make no mistake: that Property Disclosure Statement (PDS) form has turned out to be useful not only for sellers and buyers, but also for us. Yes, I know, some of us and some lawyers don’t like the PDS form. Fine. But I think it has prevented more harm than it has caused problems."

Before we had the PDS form, we’d repeat what the seller told us about the property to other members and their buyers, or directly to buyers—meaning the seller’s property representations became ours, as well as the sellers’, simply by us repeating them. The PDS form changed all of that. When signed, the sellers’ representations are only those described on the form. This somewhat limits their liability and puts due diligence more emphatically into the hands of the buyer, where it always has been. For us, the happy result is we’re now acting as postal workers, simply delivering a form containing sellers’ representations to buyers and their agents. But those representations are the sellers’, not ours. Big diff, as they say. Another box checked. 

On the technology front, we continued to improve our MLS® system. When I was first licensed, we had little binders filled with rudimentary, one-sheet descriptions of listings, all typed on the form by someone with an electric typewriter in the MLS® department. Then someone, I forget who, developed online access to those listings via something called Vandat, followed by The Wave, MLXchange, and now, Paragon. Marvellous.  

Then we started publishing catalogues of listings, denuding an entire forest every week, no doubt. Buyers and sellers always wanted to get their hands on those catalogues.  

We had a rule, at the time, that we weren’t allowed to give out the catalogues. But many of us did. I lost so many catalogues in my brokerage that I got to drilling holes through them and chaining them up. Not my finest day. The rationale for not giving out catalogues was that they contained private information, if I recall. But I also think we liked being the gatekeepers of the information.  

In an attempt to address concerns about that, we agreed to support realtor.ca so that, at last, anyone could go and look at listings for sale without having to first go through a Realtor. This was a big deal. Some thought the world was ending. But it didn’t, and now we have virtual office websites that allow anyone with an Internet connection and a willingness to identify themselves to access pretty much everything you can see in Paragon. How many checked boxes is that? 

During the 1990s and early 2000s, we led the development of a continuing education program for members. BCREA did this on a provincial scale, and it took about 15 years because there was more than a bit of kicking and screaming along the way. Some said, “I have my licence. Don’t tell me I need to take more courses.” Sigh.  

"I’m so glad we’ve now bought into the idea that professionals should never stop learning and improving themselves. Alongside of this, the Real Estate Council and now the BC Financial Services Authority established a robust relicensing education program including delivering, via BCREA, great courses like Legal Update. Check off another public protection box."

Then we had our year of infamy—2016 when our world blew up, our regulator was changed, and limited dual agency was restricted as a result of the public (and then the government) losing trust in us and questioning the regulator and then, by extension, the Board and all of us, collectively. 

This was a painful, embarrassing experience. But despite that pain, I think we’re better for it. Significant changes were made including an end to elected Council members and the tightening up of how assignments are dealt with.  

We understand now, better than ever before, that we live and die as a profession based on what people think about us. It seems obvious now, but before 2016, was that thought top of mind? We had, perhaps, become complacent, which is dangerous thing to be. Think of 2016 as being a cloud lined in silver. I do. 

I’m making the point that we have come a very long way, indeed, from those long-ago days when we didn’t know we were agents. We’ve made steady progress and fixed issues for the better over 40 years, initiating or being a party to actions that have made our business more professional, and we’ve improved things for buyers and sellers. 

"So, when we look at the current landscape and how much more improvement is needed, let’s not forget that we’ve already accomplished so much, together."

There’s a lot more work to do, and that’ll be coming your way over the next year or two. Let’s celebrate that, roll up our sleeves, and get busy making our profession even better. We can do this. 

I wish you the best.