BIG changes to the way we sell real estate in Ontario!

A lot has changed over the past 20 years, and finally after many past provincial government fails, they are finally modernizing the 2002 Real Estate Business Brokers Act that we agents are regulated under and it will now be called, The Trust in Real Estate Services Act.

The four major changes are as follows:

  1. Sellers will now have the option of disclosing the contents of competing offers in multiple buyer offer situations.
  2. The word Customer is being removed from the agency relationship between a consumer and real estate brokerage
  3. The Real Estate Council of Ontario will now be able to levy fines immediately to those who break the rules
  4. Realtors will now be able to Incorporate their earning

The first on the list is a huge one that for anyone who has either bought or sold property in Toronto over the past 20 years, you’re well aware of the anxiety that surround offer presentations.

Your looking to buy a home or condo, excited as can be, start the oft stressing task of searching for the next place to call home. You find it!! Then as your agent, I tell you, “great news, there are only 5 other buyers we are competing with to get your dream home”. Insert> deflating bubble sound here. Pop!

Sound familiar? Searching and then finding a home is challenging enough without having to actually go through the process multiple times. I’ve counselled many buyers at the start of our search that we might be putting in 2, 3 or more offers before we are successful in getting you your next home. It can become taxing and discouraging at the same time.

Will this new rule make it easier or more importantly, save a buyer money in the end? Me thinks not. The power still lies with the seller to decide if they want to disclose this information. I can see it happening if there are maybe two offers are the gap is very small, as the downside risk is minimized. But on properties where there are 10 or more offers, I can’t see it happening. And when it comes time to sell your house and as a seller we are looking at these 10 offers, I’ll explain further to you then.

So although this a big change from the old rules that prohibited agents (see, the agent is now removed from this decision and the backlash that accompanies it) from disclosing a competitors offer, I think the change will be strategic for the seller, and adds nothing for the buyer.

Also look for the return of escalation clauses in contracts. “the buyer agrees to pay $500 more than the next highest offer”. These clauses create a shit show and allow for massive abuse (think dummy offers, and yes, don’t put that past some agents). Buyers will also need to exercise caution going into an offer situation to avoid the world knowing how much they are willing to pay for a property. What if they lose out on an offer and then a neighbouring property is avail, and receives multiple offers?

Let’s move onto the next one. This is pretty much a simple one. The term customer is being removed and in it’s place, becomes self representation. This still allows for multiple representation (for now at least) but makes it much clearer on where obligations lie. Typical representation between a Realtor and client is of a Fiduciary relationship. This in it’s purest form is clean and straightforward.

Moving onto RECO being able to levy fines immediately on bad agents, misleading marketing and advertising, and other such items, is welcome by me. There are too many bad apples in real estate and dealing with them is not as easy as one might think. This will help, at least in a monetary way, in dealing with them. I think some further regulations should be added but this is a good start.

Finally, Realtors in Ontario can finally join most other professional organizations of the 20th century and now incorporate for tax and income purposes.

This fight has being going on since I first started in real estate in the dead-slow spring market of 1996 so I’m thrilled of it’s addition. Granted this has minimal impact on the Realtor membership (maybe beneficial for the top 15%?) dues to cost and regulations, but still, I’m happy it’s here. Secretively, Brokerage owners have been lobbying against this (once again, my opinion) for their own reasons, but other provinces across Canada have allowed for it for years so I’m happy the playing field has been levelled.

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