Should offers without conditions be part of Realtor regulation?
It’s called a no-conditions offer, and if you haven’t heard of it, you haven’t bought a home in Vancouver. Of course, real estate agents are supposed to discourage customers from putting bids on houses with no protection and little information about what they’re buying. But in reality, everyone knows someone who has been scared into going no-conditions — or more often, someone who has lost out on the opportunity to mortgage their future to a complete unknown because of a weakness called ‘caution’.You might say the no-conditions offer is a byproduct of a frenzied market like the one that exists in the Lower Mainland. After all, where else do buyers trail around open houses with a mortgage broker to the left of them and a home inspector to the right, desperate to beat a line-up of other overextended consumers for the privilege of paying hundreds of thousands over asking for a home that sold for a quarter of the price 10 years ago?
But the release of a report on the state of real estate regulation in B.C. this week begs a question: what is the link between effective regulation and the prevalence of sanity in a marketplace that feels more like an Army and Navy shoe sale than a home purchase?
‘Not the regulator of housing affordability’
In announcing the 28 recommendations aimed at overhauling the Real Estate Council of B.C., Independent Advisory Group chairwoman Carolyn Rogers stressed that her panel was not tasked with solving B.C.’s housing crisis.
Nor, she said, is the council itself.
“They are not the regulator of housing affordability. And they are not government who makes the decisions on who is granted self-regulatory power and who is not,” Rogers said.
“So we interpreted those things as guiding our mandate and we set our terms of reference clearly to do what we were asked to do.”
The report paints a picture of a regulator too closely tied to the interests of industry. One of the key recommendations is for half the 17 people who make up the council to be drawn from outside the world of real estate. That’s as opposed to just four outsiders now.
“It is our view that some industry members voted to council may not fully appreciate that their role is to serve the council’s public interest mandate, and not the interests of their peers or local board,” the report says.
The panel recommends doing away with dual agency, in which a single Realtor is able to represent both the buyer and the seller in a deal, saying the very idea “runs contrary to the fundamental concept of agency.”
The report also addresses the questions of price exaggeration and aggressive marketing, even envisioning a “real-time multiple offer registry where buyers can monitor …. all offers that are made on the property” in response to concerns from some customers that their offers are being lost in a flurry of bids.
All great ideas, but to what degree should real estate agents also be forced to protect consumers from themselves?
Buying into market ‘with a blank deal’
The phenomenon of no-conditions offers came up in the question and answer period which followed the release of the report. Full disclosure: I raised it.
David Peerless, a veteran real estate agent and one of the council members, said the issue is part of the day-to-day reality in his 165-person firm.
“The pressures of this market are extraordinary. In these types of markets, people are pressured into acting faster than they should be,” he said. “A professional Realtor will actually guide them away from that decision.”
Tony Gioventu, the head of the Condominium Home Owners’ Association of B.C. and one of the advisory group members, interrupted Peerless to say the issue was even worse for buyers in multi-family dwellings.
“There is no time to get the documents from the strata corporation or the property manager,” he said.
“And we do have people who are buying into markets basically with a blank deal, no subjects. The offer closes quickly and they’re regretting what they’re doing.”
Gioventu said consumers should exercise caution. And Peerless said the council would investigate.
“Certainly it’s something to explore,” he said. “Can you put it into a regulation that somebody can’t act in the way that they want to act?”
All of which seems to suggest that Realtors are just helpless, if lucky, bystanders to a phenomenon which is increasingly putting the dream of home ownership out of reach for an entire generation of British Columbians.
Of course tackling this one issue wouldn’t solve everything, but it is indicative of a bigger problem: everybody from the regulator to the government has at times treated the market like a force in and of itself.
One we’re virtually powerless to control.
Frenzied, overbidding, frightened: is that how most consumers ‘want’ to act?
Good real estate agents don’t advise clients to make bad decisions; but neither will most stand in your way if you do what you have to do in a crazy market to close a deal.