I start this article with a simple analogy.
Most of us possess a driver’s licence to drive an automobile or small truck. Just having that license is not adequate for us to drive a big rig – an 18-wheeler or heavy equipment. One has to train to do so, to be certified by a regulatory authority. Please keep that in mind as I explore my concepts of why dual agency problems are not issues with the agents but rather a result of a lack of regulatory control.
There is no question that many a lawsuit has been tried in Canadian courts by either agents taking advantage of their role (and the clients) or the agents just not understanding what their role is.
Having a real estate license or registration should have more regulatory control. To come out of a real estate school and be let loose on the public is just ripe for recklessness.
A new agent could be involved in a complex commercial or land deal with no training. But they may also find themselves in a dual agency (multiple representation in Ontario) situation and in need of additional skills to complete the task professionally.
In Ontario, I have made proposals to both the regulator and provincial association and received no response.
Here is my outline about what I feel is the right process for dual agency and its future in residential real estate:
- No agent with less than two years of experience should be allowed to undertake dual agency.
- No agent who has done less than 10 deals (that is arbitrary) despite their years in the industry should be allowed to undertake dual agency.
- Any agent wishing to undertake dual agency must take (at least) a one-day, in-person course with an examination at the end.
- The course would be written by arbitrators and mediators who work in the real estate field; there are many lawyers and retired judges who would be excellent course writers.
- Unless an agent has the certification, they simply cannot be a dual agent.
- Mandatory re-certification could be an option every, say, three to five years or as regulations, laws, etc., evolve.
- An agent could advertise they are “certified in dual agency” once the proposed certifications are complete.
It is my contention that with reference to my opening comment about having a license to drive a car but no training to drive a big rig, the problems that exist with dual agency come down to one thing – there has been little to no adequate education across Canada in the process.
Even the study of our fiduciary role is glossed over.
I remember the early training we got when I started in this industry. Sellers would ask us if we had buyers for their house. Agents who worked in a particular area did. Why hire an agent who lacked potential buyers?
By creating a system where we either list for the seller or work with a buyer, we will find another problem: an erosion of our fees as if we are listers. Then, from a seller’s viewpoint, why not go with the lowest-priced agent?
If we are not seeking buyers, we are just offering a service. Why bother having an open house to sell a home when we cannot deal with the buyers?
Open houses will make little sense (yes, I know, it is for agents to pick up buyers and neighbours that want to sell, I have heard that before).
It is not dual agency that is the problem, it is the lack of education and training that is at fault, and it appears that regulators would rather just sweep it away instead of dealing with the reality of their own failings.
To regulators, I state, “Educate, not eradicate.”
Barry Lebow, FRI, Master-ASA, ABR, SRES, is one of Canada’s most recognized real estate authorities. Now in his 54th year of professional real estate, Barry has been honoured by many real estate associations for his work in the profession. He has testified in more than 500 trials across North America. He is the founder of the Accredited Senior Agent designation program. A teacher, trainer and educator, he is an active broker at Re/Max Ultimate Realty in Toronto. Visit barrylebow.com to contact Barry.
Dead on! Great idea.
The basis of agency is to place the clients interests above all others.
If one takes time to clearly explain, ensure the potential client fully understands and acknowledges such and before any property is discussed or engaged the “Working with Realtor” form my experience is conflicts and misunderstandings are avoided.
A professional diligent agent should have no problem with the process or the outcome.
.
When I was first licensed 44 years ago I was taught to work for the transaction, not either for the buyer or the seller but to work for a fair deal with both the buyer and seller.
As always Barry, a well articulated and timely article!! Dual Agency can become very complex as can commercial sales & leasing, multi-res, waterfront and condominiums etc. The agent training provided is simply NOT sufficient to “let agents loose” for any real estate transaction type in Ontario, as they are currently allowed.
A major overhaul of our licensing program and transaction type permissions needs to take place, but will it ever? Allowing Agents to dabble in highly specialized areas is just plain dangerous!!
Well written Barry.
Working for a large Brokerage, many ( most ) of my transactions are multiple representation. In our Realestate Board currently, there are approximately 3,000 members of which approximately 400 + in our Brokerage. Educating the consumers on agency ( buyers and sellers ) starts at the first meeting ( and continues throughout the process )
Barry. Agreed. Provide special training and ensuring some experience in non dual agency before plunging into more complex situation is a very good idea. Recurring training at time of relicencing also. A must a bit like Reco update course. Representing both party should be a priviledge – requires high level skill and trust
I would take it a step further and have some form of formal on the job training for a period of 2 years perhaps an apprenticeship program. This would definitely shorten the lines for licensing.
I couldn’t agree more, especially with Barry’s comment about inexperienced agents being “let loose on the public”. I agree with Omer, I think there should be an articling period for new agents, their work should be overseen by a mentor for at least their first year in the business.
Dual agency = conflict of interest….period. You can spin it all you want with all the analogies but when you get an agent’s economic interest involved you invite bad behavior. It is basic human nature. There is plenty of proof. Look at all the RECO cases and it’s not all new inexperienced agents. You don’t need more formal education to teach basic ethics. More courses more bureaucracy. If you allow it they will continue to do it. Ban it. That’s the best regulation!
Well said. As I read the article I was mentally making counter-points but by the end was in such disbelief that I didn’t want to invest the time to tear the whole thing apart. You’ve boiled it down to the basic truth; thank you. One small analogy to add: I suppose if we offer a one-day course and some minimum experience requirements for lawyers we can go back to Buyer & Seller being represented by the same law firm too?
This response is 100% correct! When the word fiduciary is used, we as industry members have a duty to ONE client – the buyer or the seller. A possible option in a “designated agency” brokerage is to refer a buyer to another agent in the brokerage with an agreement between the two agents to return referrals. Even that arrangement is open to question in the mind of the consumer. I have seen many situations were “dual agency” is abused in order to “double end” a transaction. If we as members would focus on doing the ” right” things for the consumer, there would be a lot less trouble with this issue. A lot less law suits. A lot less fines from provincial governing bodies. A lot better image from the public. And a lot more happy, trusting customers.
^ THAT!
Fiduciary duty is fiduciary duty. I’ve yet to see any Realtor who supports double-ending advertise they engage in same or even mention that all of their promises to advise and negotiate in the best interests of the client falls away on such.
But a false equivalency appears too as a crux of the underlying argument – the erosion of fees when we “either list for the seller or work for the buyer” as if dual agency has long been the normal industry standard where it is represented in most transactions since the onset of buyer agency some 25 years or so ago or that dual agency hasn’t in itself resulted in reduced fees.
Are you ready to charge your Buyer clients to represent them? A ban of dual agency will clear out a large number of registrants and begin to compress listing fees.
Barry as usual you are bang on
It is the Brokers who failed us by allowing unethical realtors to flip contracts. Those brokers should be heavily penalized and licenses removed.
I have been an active Agent for 30 years and when Dual Agency was allowed, I did hundreds and hundreds of them. And by following the rules in all of those transactions, not once was I found a fault. Follow rules and you have no issues. I agreed proper leadership and education is key.
We now have so many Buyer’s going to the Unrepresented Agency and, in my opinion, unfair that they should not have some kind of Agency.
Most of my Buyer’s even though may be unrepresented, prefer to go unrepresented over having to deal with an Agent that do not know. We are a small valley and small community.
Bigger cities have the advantage of multiple agents to deal with, but up here, many Agents from the bigger centers will not take on a Buyer for another area, that the Agent knows nothing about, so the Buyer is being dealt with unfairly, in my opinion, by having to opt to NO Representation.
Worthy
I am going to be in the minority here. I agree with BC’s stance on dual agency. I have sold thousands of houses and was a top producer selling 60 units plus a year for close to 30 years of my 38 year career. I did lots of double enders. I have not done one in over 10 years and do not miss it.
In fact my sellers love it! It wins me listings. If we are to be totally honest I feel we all know there is a possiblity for much more liability and lawsuits against us. Why do we want to do them, for more money and it is actually easier to negotiate. Now if one wants to sell a house and represent the seller and the buyer wishes to purchase with NO representation that works well. Sorry the last couple of years have shown me in not so little Halifax how much so many realtors care about themsleves and money only. The newer agents are running around the entire province selling with no idea about areas that are outside their own. I don’t have that much faith in my industry at times, I feel integrity nor professionalism are improving but declining.
It would be simpler to ban the idea of dual agency and double enders unless one of the parties is accepting of no representation. If they require representation then refer them to someone else. It is not that difficult. 10 deals to me is nothing in terms of experience. It is about the integrity of the person, new or experienced doesn’t change this charcter trait.
If it ends up there may be some special cases in order to use dual agency they can be added.
That is my opinion. And it is only an opinion.
Cheers
Roz Prince
Halifax, NS
Hi there, agree 100%. When I came into the business, 10 years ago, I said there is no way I should be practicing real estate without a mentor. Way to dangerous, for me and my clients, I was not qualified to do the job yet. Every transaction is completely different and if you do not come from a background in the field you really don’t know what your doing. 10 years in I am in a much better position and that is only because, as you learn more you know what you don’t know…lol. It is only the fool hearted with no experience who thinks they can handle it unfortunately for their clients and themselves.
Ironically it was the introduction of MLS and offering a cooperative fee for bringing a buyer that brought single or dual agency into being a predatory concept. Dual/Single Agency is a normal practice in outside North America and a few odd countries.
The fact it is not practised as intended here comes down to the financial benefit of absorbing the potential MLS Co-fee by default is too tempting. Monetary gain can easily outweigh fiduciary requirements and professionalism.
Interesting read and some points I never thought about. Certification for being able to represent buyer and seller for the same transaction is a great idea especially with the amount of new inexperienced agents in the business.
In the 17 years I’ve been practicing I’ve done 2 ‘double ends’. To say the least it was nerve wracking having to constantly weigh the pros and cons, and ensuring I provided ethical, fair guidance and information to each party. In my case the stress and anxiety just wasn’t worth the financial compensation.
That being said it’s unfortunate that there are agents out there that put their own financial interest ahead of their client’s! There is no doubt that additional regulation and rules are required around this practice. I’ve sold properties that were ‘double ended’ in the previous transaction and when assessing valuation at the time the Seller purchased, in some cases, it was clear they didn’t get the deal they were lead to believe that they did.
Totally agree with this! Excellent ideas!
There is no case for dual agency. Dual agency is legal ONLY because the Realtors are powerful lobbyists, not because there is some imaginary consumer need for it. By definition, dual agency is a betrayal of loyalties. Even for attorneys who are trained in how to manage conflicts of interests, it is illegal for two attorneys from the same firm to represent a buyer and seller in the same transaction. The conflicts of interests are insurmountable for them, and it certainly should be illegal for anyone else who claims to be a fiduciary – especially Realtors.
Douglas Miller, you comment is spot on. Especially your final sentence. if regulators, brokers, and sales persons would stop promoting the idea that real estate licensees/registrants are fiduciaries, consumers would be far better off. Because we’re not fiduciaries. We can be, but legislation does not mandate that we deliver the services of fiduciaries.
Michael Walsh
Broker of Record
Exclusively Buyers Inc, Real Estate Brokerage
Oakville, Ontario, Canada
I’m a little late to the party but I really like this article Barry, as well as the many comments providing different points of view.
It will take me some time to process all the thoughts but my initial response is that you present some pretty solid ideas.
In 30 years I have never chased double end transactions and don’t care to. I have done a few and for the trouble they bring, I question whether they are worth the extra fees. Yet, there are occasionally times when buyers wish to deal directly with the listing agent, generally either for the convenience or for an opportunity to negotiate fees, and sellers are not generally pleased when we turn potential buyers away.
The main question to me, is who are we (or anyone for that matter) to deny consumers a service they may or may not wish to take advantage of? With proper disclosures, they, as adults, should be free to make their own choice.
With your regulatory scheme, I think there will be less problems with dual agency. I would even go a step further and maybe have a requirement for brokers to do very detailed reviews of every dual agency transaction.
Some of us clearly feel dual agency has no place in the industry. This is a good comment and one we need to keep in mind but I do make one point in this regard, especially to the view that lawyers don’t do it, why should we? A mitigating factor is that lawyers are involved in adversarial situations whereas we are involved in situations where the parties wish to deal with each other productively (and I have seen lawyers work for both sides in non-adversarial transactions); if it turns adversarial, then by all means any brokerage should probably cease dual agency.
Bottom line, some really interesting ideas.