FUTURE OF DOUBLE-ENDING

Double-ending is part of a provincial review of the Real Estate Business Brokers Act. Tess Kalinowski explains what happens now, and what changes are being considered

Current practice: Whether a consumer is buying or selling a home, both parties using the same agent must sign an agreement saying they understand the arrangement and the kind of representation they can expect.

Many consumers don’t know that the agreement they sign is actually with the brokerage, not the individual agent.

Buyers and sellers also fail to understand that only one of the parties will be the broker’s client. The other party is a customer.

The distinction between client and customer is subtle but critical. Only the client gets the agent’s advice.

The customer gets information, such as comparable sales in the area. He or she may even get help filling out forms.

But they do not get the agent’s advice on what to offer or what price to accept, said Joseph Richer, registrar of the Real Estate Council of Ontario (RECO). The most critical difference? The brokerage’s obligation is to get the best deal for the client — it’s that party’s interests the agent will protect and advance, said Brad Henderson, CEO of Sotheby’s Canada.

However, Chris Alexander of Re/ MAX Integra notes that realtors are still obligated to treat customers fairly and honestly

If the customer is a buyer, you still have to treat them honestly. But your obligation is to get the best deal for the seller and that position has to be clear, he said.

“When you have a representation agreement with either a seller or a buyer, your job is to get that person the best deal for them,” he said. “If you’re representing both sides, how do you do that?” Possible changes: RECO, the real estate industry regulator, is suggesting that Ontario move to a system called “mandatory designated representation.”

A single brokerage would still be allowed to represent the buyer and seller. But each side would be assigned its own agent.

Both sides would have the benefit of an agent’s advice and a champion for their end of the transaction.

Forcing each party to use separate brokerages would severely restrict consumer choice, particularly in more rural areas, RECO’s Richer said.

Some transactions would be exempt from the rule. Sales involving estate executors or those in remote areas where it would cause “undue inconvenience” could use the same agent, RECO says.

The Ontario Real Estate Association (OREA) supports a similar system where each party must have a separate agent.

But instead of select exemptions to the rule, it wants consumers to have the option of using a system called transactional representation.

Both parties would still have to agree in writing to using a mutual agent. But that agent would not be permitted to share any confidential information.

Instead, the agent plays the impartial facilitator who could not represent the buyer or seller’s interests above the other, Henderson said.

“In our industry, the best people do that anyway, because that’s the best way to bring a willing buyer and seller together,” he said.

OREA also wants the industry to use more consumer-friendly disclosure forms that use “clear, plain and prominent language.”

Bosley Real Estate agent David Fleming said consumers have a responsibility to educate themselves, especially in the biggest purchase most will ever transact.

“The consumer should be able to choose their own agent and they should be able to have an à la carte package of what they want from a representation standpoint,” he said.

Buyers and sellers also fail to understand that only one of the parties will be the broker’s client. The other party is a customer