A blog reader and I have been emailing back and forth for the past week about a house for sale in the west end that is on an “auction site.”

The both of us can’t believe that somebody would put their largest asset up for sale via this medium, and I told him that I’d love to blog about the site, the property, and the process, but I can’t, since the property is listed with a registered brokerage.

There are certain rules I cannot break, as real estate is a regulated industry.  I talk a lot about things I can’t do, and things I can’t say, but let me show you exactly where these rules are, and what they detail…

So here’s the situation: a blog reader emails me a property “up for auction” on some bizarre “liquidation” website that I have never heard of, and I start to smile from ear-to-ear.

Call me a sadist, but I love seeing people do stupid things when it comes to their largest investment.  Maybe it’s because they think they can get a better price, save money, make the process easier, or all of the above, but you will NOT convince me that listing your property for sale on MLS with a full-service agent isn’t the best way to go.

I went to this “liquidation” website, and scoped it out.

Keep in mind – this is where somebody has listed their home for sale; a home that is the largest asset they will ever own, and the sale of which has life-altering financial implications.  And after clicking “Current Auctions” at the top of the page, I was re-directed to a series of lots of Star Wars figurines, woodworking equipment, and props from the movie Transporter 2.

Yes, that’s right: somebody listed their HOME for sale through the same medium as a Luke Skywalker figure.

I just didn’t understand it.

The auction itself made zero sense either.

The “rules” dictated that the potential sale was “……sold subject to seller approval.”

So if you submitted a bid, and the bid was accepted, and the property was sold, it was still conditional upon the seller approving the deal that they already accepted.

Okay…

Then at the very bottom of the auction it reads: “A 5% Buyer’s Premium Is In Effect For This Auction.”

Oh, okay!

So the seller is just hoping that the buyer will pay their commission then?

I understand the idea of a “buyer’s premium.”  I happen to collect antique hockey memorabilia (which is in storage now, but I’m designing my dream home in my mind and it’ll be filled with crap that my wife will hate…), and the best hockey auction website in existence charges a 19.5% buyer’s premium, AND our lovely HST.  I understand the idea of a buyer’s premium on things like a $200 hockey stick, but on a $700,000 house?  Does the seller and the “auctionmaster” think they’ll just slip that little detail in there?

In any event, I wanted to do a whole feature on this ridiculous auction, but upon closer inspection, I realized that the property was under contract to a registered real estate brokerage.

Now this “brokerage” is one person, working out of his/her house, who has simply paid the fees and filed the correct paperwork to be called a brokerage, but isn’t anything of the sort in my opinion.  However, every registered real estate salesperson in Canada is considered the same, and thus the rules under the CREA Standards of Business Practice, and RECO Code of Ethics, apply.

So what are these rules I speak of?

When I write on my blog that, “I’d love to talk about this listing out in the open, but rules prohibit me from doing so,” what am I talking about?

Well, we Realtors are governed by the CREA Code of Ethics, as well as the RECO Code of Ethics.

CREA is the Canadian Real Estate Association, and while we don’t answer to them directly (we are licensed in the Province of Ontario), they set the overall rules and guidelines to be enforced as the Provincial boards see fit.

In Ontario, the Ministry of Government and Consumer Services is responsible for the Real Estate and Business Broker’s Act, which is enforced by the Real Estate Council of Ontario.  REBBA has a “Code of Ethics” just like that of CREA.

So let’s take a look at several of the sections in CREA’s Code of Ethics, and see how they might affect an honest Realtor who wants to talk openly about the business.

Article 13 – Advertising Content/Accuracy

13.1 The Internet website of a REALTOR® is an Advertising vehicle. In the event of a multiple page website, every page is an Advertising vehicle. All properties displayed and all representations made on a website must comply with the REALTOR® Code as well as applicable provincial, federal and any other requirements regarding Advertising.

So here we have the definition of a website.  Thank you, CREA.

But what’s important here is that ten years ago, a Realtor’s website may not have been considered “advertising.”  So if accused of “unauthorized advertising” of a competitor’s listing, you could have argued that your website wasn’t advertising.

When I launched Toronto Realty Blog in 2007, it was the first real estate blog in Toronto, and I was operating in a serious grey area.  I basically did whatever I wanted (to my detriment, as I would soon face a few ethics complaints that never went anywhere…), because the word “blog” didn’t appear anywhere in any of CREA or RECO’s verbiage.  Alas, it turns out there is no difference between a “blog” and a “website,” and thus all the rules apply…

Article 14 – Advertising Listings of Other Realtors

REALTORS® may only advertise a property if such Advertising has not been restricted at the request of the Seller and is in accordance with provincial and federal regulations.

This is the most important rule as it pertains to my blog, and the way I speak about active real estate.

By definition, if I so much as mention, “123 Fake Street, which is for sale for $799,900,” then I am advertising that listing.  Without permission, I can face an ethics charge.

So when I write my blogs, I have to be ambiguous and vague when describing the property.  A colleague of mine who used to be on the RECO Ethics panel told me that if the average person could take what I say, and search on MLS to find the listing, then even my being vague could still constitute a breach of the rules.

Personally, I think that’s ridiculous, but it’s why I tread so carefully.

If there’s a west-end condo listed at $579,900, my version of the story will usually feature an east-end condo listed at $569,900.  I can tell my story – whether it’s about Realtor incompetence, multiple offers gone bad, or any other experience that I detail each and every day on TRB.  But without specifying an address, or naming a name, and if the prices and locations don’t match up, then no buyer, seller, listing agent, lawyer, or any other party to the transaction would have a valid complaint.

Article 19 – Discrediting Another Registrant

19.1 The REALTOR® should not comment in a derogatory manner as to the capacity, integrity, and competence of any other Registrant.

19.2 Where any REALTOR® is asked to comment on a specific transaction or the business practices of another Registrant, such comments should be given with strict professional integrity, objectivity and courtesy.

19.3 This Article does not apply to truthful Advertising by REALTORS®. Any Advertising by a REALTOR® which contains seemingly derogatory statements about other Registrants or competitors, their businesses or their business practices may form the basis of an ethics charge only if such statements are false or misleading within the meaning of the Competition Act, or are otherwise prohibited by law.

It’s not like a Realtor would take out an ad saying, “John Smith from XYZ Realty likes to torture puppies,” but the rules have to be in place otherwise who knows what people would do.

And I can’t specify the address and listing agent for that silly auction listing that I mentioned at the onset of this post, because it would constitute disparaging another Realtor.

Article 25 – Avoid Controversies

The business of a REALTOR® shall be conducted so as to avoid controversies with other REALTORS®.

25.2 “Controversies,” as used in this Article, does not include aggressive or innovative business practices, which are otherwise ethical and disputes over Compensation or the division of commissions/fees.

This article of the Code of Ethics is stupid.

It’s like saying, “Every kid on the playground should play nice.”

Avoid controversies?

Define “controversy.”

When I posted my now-infamous blog on The Printing Factory Lofts earlier this year, it certainly was controversial, but it was important because it helped potential buyers avoid financial calamity, while opening discussions about mortgage insurance, the role of a board of directors, TARION as it applies to loft conversions, condominium budgets, and a host of other topics that stemmed from an issue in a Toronto condo that was far, far from a secret.

It was only controversial because people made it that way, so the whole idea of “avoiding controversies” in the CREA Code of Ethics is silly.

And how should I take that line about “innovative business practices?”  I don’t want to toot my own horn here, but before I started TRB in 2007, every real estate agent had the same crappy website from ONE company, and the idea of giving out information for free on the Internet was far-fetched.  Every Realtor website required you to sign in and provide your contact information, and there was no way a Realtor would say anything bad or good about a property or location; we were all robots, looking to make sales, and it was always “a good time to buy” and “a good time to sell.”

Innovation changes every industry, and ours is no different.

Through the use of Virtual Office Websites, many Realtors have skirted some of the “rules” put in place by the regulatory boards, who many of us (myself included…) believe are thwarting innovation in the name of keeping the old-guard in place.

That’s why I started my Pick5 segment, where I actually can give out the addresses of properties listed for sale, and say whatever I want about them.

Other Realtors have stuck their necks out as well.  Look no further than www.condos.ca, where Carl Langschmidt and Andrew Harrild are giving out sold data, finding their way around an absolutely archaic real estate “rule.”

–

In the end, all of these rules are in place for a reason; agree or disagree with them.

Over the last eight years, I’ve tried my best to pioneer a path to a more transparent real estate industry by empowering the public with real world situations and experiences that they wouldn’t hear about otherwise, will trying not to smash every real estate rule in existence.

So if you ever wonder why I’m being vague, ambiguous, or giving you half the story – the rules which I’ve outlined above, in addition to hundreds of others from RECO and CREA – tell you exactly why…