Most Realtors are hoping that at 8:00pm tonight, every person in the city of Toronto is taking part in some sort of “Earth Hour” and turning off their TV’s.
But I’d rather get out ahead of this, and bring your attention to a program that’s set to air at 8:00pm, that is hoping to “expose” Realtors and their dirty tricks.
CBC has clearly gone to great lengths for this story – using “hidden cameras” and sending in actors to try and catch Realtors doing something shady.
So let’s chat about whether the program tells the whole story, and whether or not the “system” in real estate needs to be adjusted…
Positivity just doesn’t sell, does it?
Look no further than this year’s United States election, and you’ll see: negativity sells.
Neither candidate is talking about what they want to do for the country, and how they plan to bring it back from the abyss (that’s my word – where I think they sit), but rather the platform of both candidates is to slam the other, as hard as they can, and hope that people vote for the one they hate less.
Negativity has always sold in the media, and its creeping into other arenas in the battle we call “everyday life” as well.
When it comes to real estate and the media, I’ve seen nothing but negativity for twelve years.
I got into the business in 2004, and everything I read was negative.
Every media report was about the imminent collapse of the real estate market, and since then, nothing has really changed.
I do a lot of media appearances, and I have a fantastic relationship with the media. For that, I’m incredibly grateful.
But when I get emails from columnists or reporters, who are always seeking to find the next sad-sap for their article, I always joke with them, “Nothing positive to say today, huh?”
They write what sells.
And when the new mortgage rules came into effect, I was contacted five different times by media members looking to write columns, or film news stories, about those who could no longer get into the market. I told one person, “I have never had a client go on camera to look stupid, sad, and poor, so I stopped asking them years ago. I’m always amazed when you guys get these sad-saps to go on camera.”
The person wrote back, “We always find somebody.”
They look until they succeed.
But for that story, they didn’t seek out individuals or couples who weren’t affected by the new mortgage rules.
I went on CTV News At Noon last Wednesday, and I told them that my mortgage broker ran his own “stress test” with 100 random files from his office, and only TWO of the one hundred approved applicants wouldn’t have passed the stress test.
Two out of one-hundred.
But the media reports didn’t talk about the other 98%. They only sought to tell the story they wanted to tell, which was that people would, from now on, have a tougher time buying real estate.
I have some very good friends and colleagues in the media, so they know I’m not slamming them.
In fact, most of them agree with my assessment – that negativity sells.
So it should come as no surprise that the CBC set out to “expose” an industry that they believe is corrupt, by secretly video-taping real estate agents who are clearly breaking the law.
Friday night at 8:00pm, on CBC – there’s a much-anticipated program airing, and I think everybody should watch it.
The real estate community has been waiting for this for two weeks.
On Monday, October 24th, every licensed Realtor was sent this bulletin from the Real Estate Council of Ontario:
Since then, the whole real estate community has been discussing, what could be in the video.
On Wednesday, CBC released this trailer:
Well, I suppose this is news in 2016.
Hidden cameras, setting people up – it’s news. People watch it.
People watch the Kardashians as well, and they’re not even real humans…
To be honest, I have no problem with the story; I don’t want to sound salty because of the content of the story, since I know this sort of thing happens, and I’m certainly not denying it.
But I feel as though CBC isn’t going to make any mention that this “happens rarely” or that this is “the actions of a few.”
The public is going to see what they want to see, and draw their own conclusions, and as negativity is so prominent in today’s society, I think the viewer will come away thinking that this is the norm.
Then, I think the viewer will take that one step further, and determine that high real estate prices are not a result of supply and demand, but rather there is a bad guy out there, and it’s Realtors.
The “bad guy” has been sought, long and hard, by the public over the last few years.
We almost had a bad guy for a while there – he or she was Asian, and was coming over here and “stealing properties from hard-working Canadians.”
But the market has continued to rise, and the “story” about the foreign buyer has died down.
So here comes a new bad guy, and he or she wears a suit with no tie, and carries a leather padfolio to every appointment!
When the story about Vancouver “shadow flipping” hit the wire back in February, it made headlines, and as I’ve said before on several occasions, the author, Kathy Tomlinson, changed the real estate landscape forever.
I enjoyed the story, and the follow-up stories.
But even I suspected that the story was blowing up into something more than it really was.
And talking to agents in Vancouver, I was led to believe that this “problem” represented a minuscule fraction of the overall market, and it was perpetrated by a very small number of agents, in a sort-of “underground club.”
Let me be blunt, at the risk of offending anybody: the shadow-flippers, almost exclusively, were a group of probably a couple dozen Asian real estate agents; a small subculture or pocket of the overall Realtor-pool, who worked together, and did what they did.
But this wasn’t really explained in any of the coverage.
The coverage, in my opinion, might have led the public to believe that the problem was rampant, or that everybody was doing it.
So when it comes to the CBC Marketplace story on Friday night, I think that viewers should take it with a grain of salt.
It’s a news story, and news is not reported, but created.
There’s news out there everywhere; every minute of every day, all around us.
But what is reported depends on what sells.
And negativity sells. No doubt about it.
I have no doubt in my mind that “double-ending” goes on in real estate under suspicious circumstances.
But it’s not the norm. Far from it, in fact.
And it’s worth mentioning that most of the houses owned by the Toronto Community Housing Corporation, that were sold by a couple agents in one blitz a few years back, were “double-ended.” Maybe there is a story somebody wants to investigate, and find out why a government-owned body like the CBC is so interested in double-ending, but a government-owned body like the TCHC turned a blind eye to it a few years back.
But as far as the CBC story and the issue of “double-ending” goes, I have one simple question that I would like you all to debate today:
Should a brokerage be able to represent both buyer and seller in a transaction?
It’s a simple question, but with one caveat.
“Multiple representation” is defined as the same brokerage representing the buyer and the seller, in the same transaction.
Not the same agent.
The Real Estate & Business Broker’s Act, and RECO, do not distinguish between the two.
So my question to the readers, and to everybody, whether you have a vested interest in this or not: should a brokerage be able to represent both buyer and seller in a transaction?
I’m not the only one asking the question.
Literally as I sat here writing this on Thursday night, I got the following notification on Facebook:
There’s Bob Aaron, one of the most notable Toronto real estate lawyers, and frequent newspaper columnist, asking the question.
But before we answer the question, let me give you a bit of a history lesson.
Once upon a time, a brokerage took a listing and sought to find a buyer for that listing. It was that simple.
Buyers would approach brokerages to see what listings they had.
Buyers would make offers, via those listing brokerages, for those properties they had listed.
And agents within a brokerage sought only to sell the listings that they had under contract.
That was the way it used to be. 100% dual agency.
And then along came this novel concept called “cooperation.”
Agents from different brokerages began to cooperate. They started to allow other agents from competing brokerages to bring offers on their properties, with the promise of compensating them.
And then along came the Multiple Listing Service, and that was a game-changer.
Consider that until the mid-1980’s, there was no such thing as “buyer agency.”
I can’t recall the exact case law (please share if you know it off hand), but until this case, every single licensed agent was bound by a duty to serve the seller’s best interests, regardless of who they thought they were working for.
Before the change in the 1980’s, you, as a buyer, had to know that the agent representing you, owed the better standard of care to the seller.
Suffice it to say, the establishment of buyer agency was a long time coming.
So fast-forward to today, and we have listing brokerages and cooperating brokerages, and we have listing agents and buyer agents.
So do we want to take things a step further, and institute regulations that prohibit any brokerage from representing the buyer and the seller?
That, ironically, would be the complete opposite of how real estate was sold, say, fifty years ago. It would be a complete 360. We’d go from only representing both buyer and seller to never representing buyer and seller.
Ultimately, I think it would cripple some agents, and brokerages, and it might have an adverse effect.
As a buyer, you would almost want to be represented by an agent who works for a brokerage that has no listings! Otherwise, you risk not being able to offer on that brokerage’s listings. Against your own best interests, you’d have to find some hack agent who works for a hack brokerage, who don’t have any listings!
So is banning multiple representation really the answer?
Or can we maybe, just maybe, acknowledge that the CBC program airing on Friday night is attempting to paint the whole industry with the same brush?
As for the idea that one agent can’t represent both buyer and seller, if you thought of this, then you’re smart; you’re following along. The problem is, what’s to stop a listing agent from simply handing off a buyer to a colleague, so that colleague can make the offer and demonstrate arm’s length?
I’m sure you have other ideas, and my cynical side can tell you why those wouldn’t work either.
I’ve always thought that the manager or broker of record should be in charge of reviewing offers when there’s an agent with his or her own offer on his or her own listing. But the problem with that is many brokerages are one-man operations, or fly-by-nighters, or discount brokerages that the public seemed to want oh-so-much, even though none of them are doing any business.
So could RECO force these one-off brokerages to have an on-sight manager, in their non-existent virtual offices, to oversee regulations and best practices?
Well, it wasn’t my intention to end on such a sour note, but it’s come from a sour place; this idea that real estate is rampant with corruption, and it needs fixing.
CBC’s Marketplace will be an interesting watch, and it’ll ruffle a few feathers, spawn 1000’s of online comments, and eventually it will fade away.
But the idea of how to properly deal with multiple offers, and/or multiple representation, will not go away.
Banning multiple representation is not the answer.
So I ask you: what is?