The Terrace real estate market is about to get a little more complex, Realtors fear, as new rules put an end to the practice of agents acting on behalf of both buyer and seller. Members of the B.C. Northern Real Estate Board are warning that consumers in rural and small communities like Terrace may have fewer choices over who handles the deal when it comes to buying or selling a home.
As of March 15, dual agency, or limited dual agency, will be prohibited. This is when is a licensed Realtor represents both a buyer and seller in a transaction, or two or more competing buyers.
The idea to end the practice was first raised by the Superintendent of Real Estate in September, stemming from recommendations made in a report to the Real Estate Council of BC in June 2016. That report was prompted by allegations that some agents were flipping homes multiple times before a deal closed. This “shadow flipping” drove up prices and commissions, but was focused mainly on the Lower Mainland’s hot real estate market.
The report found that a Realtor representing more than one party could hinder their ability and duty to act in the best interests of the client.
But while the new rule might protect some consumers, some Realtors, especially in small towns like Terrace, will struggle to find jobs that don’t present a conflict.
“Quite often you get buyers and sellers who both know the same Realtor and trust that Realtor,” Jim Duffy, a real estate representative with Terrace Real Estate Company said.
“Without having limited dual agency, unfortunately, one of them has to go and deal with somebody else they may not be as comfortable with.
“A big part of my business over the years has been repeat customers. They’re comfortable with how I handled things before and they’re very comfortable to come back. Now, all of a sudden, I have to say, ‘no, I can’t deal with you because I’ve also got the listing you want.”
Having worked in the industry for 39 years, Duffy feels the pitfalls of dual agency is far less prevalent in the north and other rural areas where one relies on their reputation for a livelihood. “Even in Vancouver, where you can hide a lot easier, it was probably a small segment that created the problems, but when you get the bureaucratic authorities involved they swing the pendulum right to the other end without sometimes stopping to think how it will all work out.” He points to Ontario, whose provincial authority this year backed off a ban on dual agency after public outcry.
Although it will take time for the province to adjust to the changes, the goal is only to protect the consumer, said Mykle Ludvigsen, a spokesperson for the Office of the Superintendent of Real Estate.
“Our job here is to make sure that people that have representation when they’re buying and selling something worth so much money are fairly and properly represented, and that is always our focus,” he said. “There are 35,000 realtors in the province of B.C. and I’m certain that they will find a way to manage this.
“We’re here to serve the public and not the industry.”
John Evans, president of the B.C. Northern Real Estate Board is worried the new rules will only mean lower quality service for the northern consumer.
“Agents who have grown up in these small communities will have conflicts everywhere they look,” he said in a letter to the editor. “More agents will be providing services in under serviced areas despite the fact that they have no knowledge of the local area.
“The loss of dual agency will restrict the services that we can provide to the consumer. ‘I’m sorry sir, I cannot show you homes. I’m sorry Ma’am, I cannot help you with your high assessment. I’m sorry you two, despite the fact that you are good friends and going through a divorce, I cannot help you determine the value of your home. I’m sorry, I can put my sign on your lawn but I can’t sell your home to any of my former clients.’” But Ludvigsen argues the new regulations are very similar to other professions, such as law, where one lawyer can’t represent both sides.
Evans doesn’t see it that way: “It is not the same … Think of the agent as a mediator to the transaction when both parties have a common goal — one wants to buy and the other wants to sell — it is quite simple.”
-with files from Quinn Bender