B.C. Real Estate Superintendent Carolyn Rogers has signalled she will recommend wide-ranging reforms of the real estate industry, including much tougher penalties to punish and deter realtors who are found to have engaged in predatory practices.
Her comments are contained in an interim report of an advisory group she was appointed to chair in the wake of revelations of misconduct by realtors in the overheated Vancouver-area real estate market.
The main example has been the practice of undisclosed shadow-flipping, where the home is resold to other, different buyers than the original one prior to closing – unbeknownst to the seller – allowing intermediaries to extract profits and realtors to collect more commissions, while ultimately driving up prices.
Rogers noted realtors are expected to solely defend their client’s best interests at all times and suggested the current ability of realtors to represent both sides of a transaction creates risk that advantage may be taken of some consumers.
“Abusing otherwise legal practices such as assigning contracts or acting in any way that fails to clearly disclose the interests of a licensee or puts those interests ahead of a client’s interests, cannot be tolerated,” Rogers said.
Her report indicates the Real Estate Council of B.C. should get more enforcement tools to regulate realtors, and that all contract assignments be reported directly to the council.
She said penalties for unethical behaviour must be increased significantly – potentially with additional commissions and profits confiscated – and those penalties must apply to more types of infractions.
Premier Christy Clark had previously promised the province will deliver reforms to take the profit out of shady practices.
Rogers also flags “blurred lines” between the Real Estate Council of B.C. and industry realtor associations, which have taken on quasi-regulatory functions.
“We are concerned that the trade associations have assumed the role of triaging consumer complaints and are doing so with no requirement for public transparency or reporting to the council,” she said. “We believe this must be cleared up.”
Also of concern, the report says, is that real estate licensees have reported misconduct to the media but not to official channels, apparently out of concern for repercussions.
B.C. Finance Minister Mike de Jong said he believes Rogers’ probe is on the right track and he’s particularly concerned about her findings of blurred lines between the regulating council and real estate industry associations.
“Is the regulatory structure itself equipped to properly protect the public interest?” de Jong asked. “It needs to be clear to consumers and clients who has primary responsibility for that.”
He also acknowledged “the influence this red hot market is having on the industry.”
Real Estate Council of B.C. chair Marylou Leslie said the council fully supports the advisory group’s work.
Rogers’ advisory group is aiming to deliver a final report and recommendations in early June.