First world problems.

We know what they are, we know that we shouldn’t let them bother us, but we’re incapable of following our own advice.

First world problems; “A relatively trivial or minor problem or frustration (implying a contrast with serious problems such as those that may be experienced in the developing world).”

At this point in my life, I am absolutely, positively, unable to watch live sports.  The start times, combined with the time committment itself, means I have to watch everything on tape-delay, and fast-forward anything non-essential.  Being the rabid sports fan that I am, this is problematic.  First-world-problematic.

As lame as this sounds, golf is my favourite sport.  It’s probably tied with football, and like all Canadians, I’m a massive hockey fan (not as much anymore since a group of American businessmen stole the Canadian game and turned it into soccer on ice), but The Masters is, without a doubt, my favourite event to watch.

I was able to watch a good portion of The Masters on one of my monitors at work on Thursday, but I missed every section of action on Friday.

On Saturday, I was working all morning, all afternoon, and into the early evening.  But I had PVR’d The Masters, with hopes of getting home to watch it around 6:00pm, so long as nobody spoiled it for me.

Do you know how hard that is?

First world problems.

Ever since Pete almost ruined Canada vs. Belarus during the 2010 Winter Olympics and I overreacted by lighting his house on fire, my friends know not to message me during live sports.  Having said that, you can never be too careful!  So I texted my closest handful of friends, “Taping The Masters!  No Spoiler!”

I drove 45-minutes to Stouffville on Saturday, in complete silence.  No radio, no text messages.  Same thing on the way home.

In between putting my daughter to bed, eating dinner, and watching a movie with my wife, I was able to fly through Saturday’s coverage in about 90 minutes with the help of fast-forward.

Then came Sunday.

First world problems.

For those of you in the know, the weather in Augusta, Georgia on Sunday was threatening to ruin the tournament, so a decision was made to have the leaders tee off at 9:20am rather than the usual 2:30pm start time.

I was able to watch the first two hours before I had to head out on appointments, and that’s when things really got tricky.

Imagine trying to conduct business in the Toronto real estate market without checking your phone?  It’s impossible.  So imagine me, literally looking at texts and emails through a pinhole, ensuring any personal messages don’t make it all the way to my iris.

First world problems.

I finished my 3pm appointment, then headed to my Mom’s house where she had PVR’d The Masters for me.  However, her math was off, given the “Guide” reflected the scheduled programming for Sunday and not the actual programming, and she neglected to record the last half-hour.

My phone dinged, and dinged, and dinged.  And all the while, I cursed whoever that was, messaging me.

The TV went off while Tiger Woods was at (-14) and had two holes to play, and while I was about 92% certain that he was going to win, I wanted to witness the action myself.

I had my wife check my messages, and ensure I wasn’t missing anything important, but also ensure nobody spoiled the surprise for me.  And you know what?  My wife said that there were three people who would have done so.

First world problems.

I went home around 7pm, watched the last two holes, and saw what I deem to be the most incredible sports feat in a long, long time.  We can argue that later, but in my world, this is the best thing I’ve seen since Team Canada won gold in 2010.  It’s my favourite sports moment in a decade, no question, and other Tiger-fans will agree that this was absolutely indescribable.

So what’s my point, other than the obvious GO TIGER OMG TIGER!!

Well, perspective, I guess.  I spent so much time and energy on something seemingly so stupid, and I wish I would learn from that.  I wish we all would.

And then at the same time, I guess I realize that we don’t live our lives in a vaccum.  And we do live in the first world.

It’s a paradox that I dwell upon each and every day of the week.

Last week, we talked a lot about multiple offers and bully offers, and during the midst of some pretty heated discussions, the Ontario Real Estate Association dropped a bombshell that nobody saw coming.

The timing could not have been more ironic.

And had there been more time last week, we would have discussed this ad nauseam.

So at the risk of beating this horse to death, and spending far too much time on one topic when there’s a lot to talk about in the Toronto market, let’s look at the OREA press release:

FOR IMMEDIATE RELEASE
April 8, 2019

ENDING Bully offers WILL GIVE ALL BUYERS A FAIR CHANCE AT OWNING A HOME, say Ontario REALTORS®

OREA responds to government consultation with 28 recommendations for raising professional standards and strengthening consumer protection

TORONTO, ON – In looking for ways to increase fairness in the home buying process, Ontario Realtors are recommending an end to “bully offers”, a practice that gives some buyers an unfair advantage when making an offer on a home. Released today, OREA’s Vision for a Modern REBBA: Getting to the Highest Professional Standards in North America outlines 28 recommendations for modernizing real estate rules and ensuring that the Realtor at your side during the biggest transaction of your life has the highest professional standards, training and modern tools in North America.

“If a home listing includes an offer date, that’s the date on which all offers should be considered; an offer made before that date, which is known as a pre-emptive, or ‘bully offer’, should not be allowed,” said Karen Cox, OREA President. “This will ensure that all interested buyers of a particular home get a fair shot at making an offer. For sellers, it means they will have a chance to work with their Realtor to carefully and thoughtfully consider all offers without feeling like they are in a pressure cooker.”

OREA’s Vision for a Modern REBBA also takes aim at escalation clauses, a provision that a buyer can use to beat competing offers by automatically topping any better offer with a previously stipulated amount.

“A clause that allows a buyer to automatically bump all other offers out of the running in a multiple offer situation makes for a very uneven playing field,” said Cox. “Further, for the escalation clause to kick-in, a Realtor must reveal private financial information such as the highest offer on a home to the buyer using the clause, which violates the Realtor Code of Ethics. Eliminating contradictory rules like this will strengthen consumer confidence in the Province’s real estate market.”

In transactions where real estate salespeople are caught breaching REBBA, OREA is calling for a process called disgorgement, which would force rule breakers to pay back any income they made by unethical means.

To view a copy of OREA’s Vision for a Modern REBBA, visit www.rebbareform.ca.

There’s so much to discuss here, but let me start from the very beginning.

The Ontario Real Estate Association has always been in charge of education, and up until about one year ago when it was announced that Humber College would be in charge of education moving forward, that’s all agents really knew of OREA.  Today, to be quite honest, most of us have no idea what OREA actually does.

OREA, and the people who run it, have basically reinvented themselves as a real estate lobbyist, and as evidenced by the verbiage above that reads, “Ontario Realtors are recommending an end to bully offers,” you can plainly see that OREA has decided to speak for us.

TREB does the same thing, however, and I will admit that at least OREA consults us.

Recall the blog I wrote back in February about OREA’s survey regarding multiple representation.

Unlike TREB, who is basically overseen by one single person, and a group of sixteen others who are supposed to tell that person what to do, but are really just told to be quiet, the Ontario Real Estate Association does seek our opinions from time to time.

I’ve personally sat with Tim Hudak to discuss the issues at hand in real estate, and I know that he has met with hundreds of agents in an effort to analyze the strengths and weaknesses of the industry, and find out what changes should be made.

What changes should be made, however, all depend on how recommendations are taken.  Because OREA can’t really do anything.  All they can do is lobby.

While I believe that many agents view bully offers as problematic, I would like to see where OREA’s data enables them to conclude, “Ontario Realtors are recommending an end to bully offers.”  I’ve always said, you can make numbers say anything you want.  So if OREA asked a simple question on a survey like, “Do you enjoy working with bully offers?”  And 51% of respondents said, “no,” does that enable them to make the claim that “Ontario Realtors are recommending an end to bully offers?”

I know, you guys don’t care.  This is of no concern to you, especially those of you that do want to see an end to bully offers.  But how we get to this point, like it or not, is important.  It underscores how much, or if real estate professionals want to make the industry better.

I for one am not necessarily convinced that eliminating bully offers would make the industry better, and I know I’ll take flak for that, but let me explain.

I don’t believe that in order to fix a problem, you have to eliminate the existence of that which makes a situation problematic.  Just imagine if everything in life worked that way.

Bully offers are an issue, I understand.

But to simply ban bully offers is merely a band-aid solution.

I’ve long argued that agents are the problem, not the tools at their disposal.

It is the agents that don’t understand bully offers, and either don’t know how to submit them (as I explained last week), or don’t know how to work with them on the listing side.  Furthermore, agents don’t know how to educate their buyers, and then the buyers cry, “We hate bully offers!  They’re so unfair!” when all the while, the agent could have simply prepared them from the start.

Sure, but ask the successful buyer, who submitted a well-thought-out, well-timed bully offer, thanks to their experienced and capable agent, and that buyer will rejoice in the existence of the bully offer.

It’s all about perspective.

The “problems” with bully offers have been around for some time.

Consider this February, 2017 article in the Toronto Star, where I was interviewed:

“Toronto Realtors Warned On Handling Of Pre-Emptive Offers In Red-Hot Market”

Back in the 2017 madness, agents were starting to detail in the listings, “Seller Reserves The Right To Accept Pre-Emptive Offers Without Notifying Anybody,” and that was clearly illegal, and wrong.  As I’ve written in this space many times before, it seems as though these agents felt that if they disclosed that they were going to break the rules, then breaking the rules would be okay.

Last week, when the OREA press releases dropped, I was interviewed again by the Toronto Star for this article:

“Shove Bully Bids Out Of Housing Market, Says Real Estate Association”

I don’t know if I came off as the dissenting agent in this article, but I merely aimed to convey what I’ve been saying for years: agents need better training!  There are too many real estate agents, too many part-time real estate agents, too many crappy ones, too many that can’t speak English, too many that can’t read or do math, too many that lie, cheat, and steal, and too many that make the rest of us look bad.

And if training was more stringent, and agents were able to get out into the field with more knowledge, maybe we wouldn’t be having all these issues with bully offers.

For years, the curriculum at “OREA College” – as though this is actually a college, was so out of touch with the way some markets worked, specifically Toronto.  The education and training reminded me of so much of what I endured in university, which is textbook-knowledge, and zero real-world application.

Most of what a real estate agent actually needs to know in 2019 is found through experience, and the curriculum should strive to reflect this.

I firmly believe that there should be some sort of articling phase for new agents, just like there is, er, was for lawyers.  But it seems the societal-bar has been lowered to a half-inch above the ground for lawyers now too.

In the United States right now, four states — California, Virginia, Vermont, and Washington — allow aspiring lawyers to take the bar exam without going to law school. Instead, they are given the option to apprentice with a practicing attorney or judge.  What is the world coming to?

The single-greatest change I’ve seen in organized real estate since I started my education back in 2003 was the new curriculum announced via Humber College, slated to being July 1st, 2019.  This will mean an aspiring agent may spend years in a classroom, rather than mere months.  Not only will this deter the wanna-be part-time, fly-by-nighters, but it will also raise the stakes for those that want to make this a career.

Despite OREA’s announcement last week, I refuse to believe the answer to the bully-offer-problem is to eliminate them altogether.

Having said that, if bully offers are banned, I won’t object.

I currently use bully offers to my advantage when working on behalf of buyers, and I know the ins and outs of how to work with or around them when representing a seller.  But the concept of the bully offer in itself is a bit odd.  A property is listed with a day and time to review offers, but, the seller doesn’t need to abide by that date.  Then what’s it all for?

That’s what I wondered the first time I had ever heard of a bully offer, which must have been ten years ago.

An agent in Winnipeg posted on Friday’s blog video:

“In my market in Winnipeg vendors are only allowed to move an offer date back only.  They also are not allowed to accept an offer prior to an offer date.”

That makes sense, does it not?

I can argue both sides of this, and as I’ve noted, my disagreement with the notion of banning bully offers has more to do with my disdain for the inexperienced, uninformed agents who refuse to learn the ropes, than the “fairness” of bully offers to begin with.

There’s a hybrid solution here somewhere, of course.

Perhaps an offer date can be moved up by 24 or 48 hours.

It would allow for a bully offer to be presented by the buyer, and considered by the seller, while providing time for other buyers and agents to get their ducks in a row.

Of course, this only works if the listing agents do their job, and contact every person who has expressed an interest in the property.  So a simple fix isn’t that simple after all.

You want my prediction?

Bully offers are here to stay.  Don’t shoot the messenger.

As for the other two parts of the OREA press release – escalation clauses and disgorgement, I’m in favour of both proposals.

I wrote about escalation clauses two years ago:

June 2nd, 2017: “What Is An Escalation Clause?”

For the record, I have never seen an escalation clause in an offer.

I don’t know another agent who has seen an escalation clause either.

In my mind, they are illegal.  There is no two ways about it.

If a listing agreement that doesn’t contain a list price isn’t binding, then how can an offer that doesn’t contain a bid price be binding?  True story.  You can’t sign a listing with a seller and say, “We’ll fill in the price later.”  The listing agreement isn’t binding, so you have to put in something for the price.  By the same token, you can’t submit an offer with no price, and include a clause that continually increases your bid price by X-amount.  You just can’t.

I do believe that these escalation clauses are only prevalent in certain areas, among a certain demographic.  But they seem to be problematic enough for OREA to need to weigh in on it, and frankly, I’m surprised.

Banning escalation clauses is a no-brainer.  OREA got it right here.

“Disgorgement” is defined by Investopedia as:

Disgorgement is repayment of ill-gotten gains that is imposed on wrongdoers by the courts. Funds that were received through illegal or unethical business transactions are disgorged, or paid back, with interest to those affected by the action. Disgorgement is a remedial civil action, rather than a punitive civil action.

While OREA isn’t looking to take agents to court, they are recommending that the Real Estate Council of Ontario, through the disciplinary process, use disgorgement as a punitive measure.

The first time I met with Tim Hudak, I told him that being fined by RECO isn’t really a deterrent, since agents might make a $20,000 commission and get fined $5,000.

With disgorgement, agents would forfeit anything they earned from transactions in which they acted illegally or unethically, and while I still don’t think this would discourage agents (many can’t see past tomorrow…) it would ensure that agents aren’t benefitting from filthy lucre.

I can see situations where I like this “new” OREA, and situations where I disagree with them.

But discussion can never be a bad thing, and it has agents and market participants talking.

Now let’s just see if all this results in action…