Homebuyers and home-sellers in sa国际传媒 could sleep more soundly if the province bans the practice of allowing the same real estate agent to represent both sides in a sale.
The sa国际传媒 government鈥檚 Office of the Superintendent of Real Estate is proposing to stop dual agency 鈥� also known as double-ending 鈥� except in small communities with limited access to agents. Agents and the public were given a month to comment on the idea and other rule changes.
Ontario is also proposing a ban, and the practice is prohibited or restricted in some U.S. states.
The sa国际传媒 Real Estate Association opposes the change.
鈥淥ur biggest concern is the consumer鈥檚 right to make a choice about who they work with is being taken away from them,鈥� CEO Robert Laing said. 鈥淭he superintendent is trying to protect the consumers, but we think he is forgetting that in a free-enterprise market the consumer needs choice.鈥�
It鈥檚 clear that the vast majority of sa国际传媒鈥檚 22,000 licensed real-estate agents are ethical and are dedicated to doing the best for their clients. The question is: When one agent is representing both buyer and seller, for which client is the agent doing his best?
At its simplest level, the buyer wants to pay the lowest possible price, while the seller wants to get the highest possible price. A single real-estate agent faces a monumental challenge in trying to meet both goals.
In addition, the agent is motivated to make a deal happen; otherwise, he doesn鈥檛 get paid.
Of course, letting a deal fall through leaves the seller without a sale, the buyer without a house and the agent without a commission, so it鈥檚 arguable that from everyone鈥檚 point of view, a deal is better than no deal.
However, if getting that deal means encouraging the seller to accept a lower price than he wanted, is the agent truly acting in the seller鈥檚 best interest?
If the seller was being unrealistic in sticking to a high price, then perhaps everyone鈥檚 interests are met. But what if the higher price was not unrealistic? What if another buyer could have been found to meet the price, if the agent had looked a bit harder? What if the buyer could have been persuaded to offer more?
Those and many more ifs are at play, and the answers to many of them are unknowable. With dual agency, buyer and seller would always be left with questions about those ifs. And, given that people are poor judges of their own motivations, even the agent would probably never know whether he or she had given the best possible service to both clients.
However, if buyer and seller each have their own agent, no one has to question their independence.
Two people getting a divorce would never hire the same lawyer because it鈥檚 almost impossible for one person to represent both sides fairly. Buying a house is generally the biggest financial investment in a person鈥檚 life, so it also merits attention to potential conflicts.
The proposed changes sprang from report of an independent advisory panel released last year. The panel was created after cases of a few real-estate agents putting their own interests ahead of clients, some not abiding by rules about reporting requirements to prevent money laundering, and agents failing to disclose assignment of contracts (known as shadow flipping).
While those few bad apples shouldn鈥檛 spoil the bunch, we have to recognize that everyone in these transactions is fallibly human. Getting rid of dual agency is one way to recognize that reality.
