Canadian real estate agents and brokerages are accused of working against their clients. Not by some rando either, but the claims came from the Real Estate Council of Ontario (RECO). The provincial regulator wrote the industry to explain they found clients were directed based on commissions. This tactic means some buyers may have bought real estate that wasn’t in their best interest… but the agent still got a sweet commission out of it.
Canadian Real Estate Agents Found Directing Buyers To Higher Commission Properties
RECO said some agents and brokerages are “steering” clients towards higher commission homes. Steering is the process of withholding information from a client, against their best interest. In this case, they allege some agents and brokerages directed people to certain properties based on commission. This may have pushed more buyers to the same home, when better options were available. That’s one way to start a bidding war, eh?
“It has been brought to our attention that some real estate agents and brokerages in Ontario may be steering their buyer clients toward listings where the seller is offering buyer representatives higher commissions over those offering lower commissions,” said the Ontario regulator to local industry.
Adding, “we are concerned that this may be happening without the buyer’s informed instruction.” Perhaps the buyers just enthusiastically preferred higher commission properties after finding out. A mystery for the ages, really.
Ontario Warns Steering Is Illegal, and Can Result In Losing Your License
If you see something, say something… please? The regulator is asking the industry to report this kind of behavior, if they become aware of it. They also remind them, fines can run up to $50,000 for an individual and $100,000 for a brokerage.
They warn, in extreme situations, they will revoke the agent or broker’s registration. This would restrict their ability to conduct future real estate trades in the province. Probably a good idea to remind people of that, since the maximum fines are smaller than a commission cheque in some parts of Ontario now.
Agents Are Asked To Explain Their Obligations To Buyers
The regulator says there are a few things agents should emphasize to buyers to help them. Amongst the tips are confirming the details of the buyer’s criteria in writing. They should also document how the agent will share listings, and commission structures.
If Steering Is A Problem, Few People Have Been Punished For It… At Least For Now
If this is a real problem, the regulator has yet to show much action. Only one enforcement action was taken by RECO in August — in total, for all complaints. It wasn’t clear if it involved steering either. One needs to go back a few months to see a penalty specifically for failure to disclose compensation. The email makes it seem like they’re knee deep in steering, but few public data points show this is the case.
That said, they wouldn’t bring it to the attention of the industry if it wasn’t an issue. Regulators generally prefer not to allege a criminal activity is occurring if it was just a one off. They might be in the middle of investigating these claims, though. Or the claims may be really hard to prove, since clients don’t know when information is withheld. It’s hard for consumers to know what data is missing in an industry notorious for restricting the public’s access to data. In the meantime, caveat emptor.
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