OREA asks Ontario to revamp realtor rules

OREA asks Ontario to revamp realtor rules
OREA asks Ontario to allow open bidding process, revamp realtor rules
The Ontario Real Estate Association (OREA) is recommending the province adopt a new open bidding process that could be a game changer for home buyers, who are currently forced to bid blind against competing offers in Toronto’s hot housing market.

Under the current rules, realtors aren’t allowed to share the details of an offer with anyone other than the home seller. That means consumers, facing competition from other buyers, have no idea what money or conditions they are bidding against.

OREA urges province to revamp realtor rules, allow open bidding process

The blind process has been blamed for driving up home prices in particularly fierce competition such as that seen in the Toronto-area real estate market in 2016 and early 2017, when it was common for a property to attract a dozen offers, sometimes more.

Currently, most buyers and sellers participate in a blind bidding process where buyers go in with an offer, in the hopes that they are not outbid. If they are, they are then asked to raise their bid, but without knowing the details about the alternate offer.

The market has since cooled, but less heated competition for homes continues, particularly in the city of Toronto.

“This would allow for all parties to put everything on the table and have a fully transparent offer process if they so chose,” said OREA president Tim Hudak.

The group says doing so would result in a more transparent multi-offer process that would give buyers more information to make their best offer, and sellers the knowledge that they have received the best offer for a property.

A more transparent bid process is one of OREA’s 37 recommendations to the Ontario Progressive Conservative government, which is expected to update the 2002 Real Estate and Business Brokers Act (REBBA) that governs how real estate is transacted in the province. It’s not clear when that will happen.

“We are still in the process of being fully briefed on this file. We will provide updates once we have further information,” said an email from David Woolley, spokesperson for the Ontario Minister of Government and Consumer Services Todd Smith.

One of the suggestions includes permitting realtors to disclose details about a competing offer to another bidder, if all sides involved agree. This would include offer price, closing dates and any conditions.

The former Liberal government started the process, raising the fines for realtors found violating REBBA. But their proposed changes to rules allowing one realtor to represent both buyer and seller were not enacted before this year’s change of government.

There is a strong consumer protection case to be made to clear up this grey area and stop the illegal activity, he said. If youre going to trade in real estate, you need to be registered.

Opening up offers to competing buyers doesn’t guarantee the selling price of a home won’t rise just as it does here when buyers are trying to guess at what it will take to beat a competing offer, Hudak said.

The average price of a home in 2002 was $275,000 in Toronto and most deals were closed by a fax machine, said Tim Hudak, chief executive of OREA, which has more than 70,000 members.

In Australia where it’s common to hold public auctions on the lawn of a house, “the same sort of fever can grip you,” he said.

“We think that if this process is chosen it will give people time to weigh their decisions and decide if they’re going to improve their offer. It takes the circus out of what you see in open auction jurisdictions like Australia with the benefit of transparency,” said Hudak.

Whether consumers decide to consent to a transparent multiple offer process or not, they should have the choice under REBBA, according to the 33-page report.

It would probably be up to the seller to determine if they want to opt for an open offer sale, he said.

– Reverting the total number of hours required to complete a realtor licence to 255 hours, from the newly decreased 120 hours (set to come into effect in 2019).

Toronto Royal LePage agent Desmond Brown said the move “would be a huge game changer,” adding if people know what others are offering for a home, it would be an exciting step in the direction of greater transparency.

In a report Thursday, the group says the Real Estate and Business Brokers Act (REBBA), which was put in place in 2002, is in need of a revamp.

“There’s still too many questions that a lot of the losing agents are asking after the house has sold. People are always wondering how fair was the process was,” Brown said.

“It will probably stabilize prices a bit more because there are many instances where we’ve had winning bids that have been well over $150,000 more than the second-highest bid,” he said.

– Allowing realtors to incorporate their businesses, which is permitted in B.C., Quebec, Alberta, Saskatchewan, Manitoba and Nova Scotia.

Under the current legislation, real estate agents are prohibited from disclosing any of the financial or other conditions of an offer. But the brokerage representing the seller has an obligation to tell other potential buyers how many offers are in play on the property, said Joseph Richer, registrar of the Real Estate Council of Ontario, the industry regulator.

The policy of not disclosing offers was likely designed to prevent agents and sellers from using competing bids to drive up prices, he said.

Currently, most buyers and sellers participate in a blind bidding process where buyers go in with an offer, in the hopes that they are not outbid. If they are, they are then asked to raise their bid, but without knowing the details about the alternate offer.

OREA’s report follows a yearlong review of the legislation by a task force made up of the heads of the country’s top real estate brokerages, including Sotheby’s International Realty Canada, Royal LePage Canada and Re/Max Integra.

The group says allowing this would result in a more "transparent" multi-offer process that would give buyers more information to make their best offer, and sellers the knowledge that they have received the best offer for a property.

The report also suggests tougher rules be introduced against those who operate as real estate “consultants” in an effort to avoid being required to register and train as realtors.

The Ontario Real Estate Association is making more than three dozen recommendations to the provincial government on how it should update the rules governing realtors, including allowing for a more open bidding process for buyers and sellers.

Hudak said his group has seen a growth in the number of people who act or pass off as realtors, but do not operate under the same legal and ethical rules. He said newcomers from Chinese and Korean communities have been the biggest targets by these consultants.

Reverting the total number of hours required to complete a realtor licence to 255 hours, from the newly decreased 120 hours (set to come into effect in 2019).

"There is a strong consumer protection case to be made to clear up this grey area and stop the illegal activity," he said. "If you're going to trade in real estate, you need to be registered."

Allowing realtors to incorporate their businesses, which is permitted in B.C., Quebec, Alberta, Saskatchewan, Manitoba and Nova Scotia.

"The average price of a home in 2002 was $275,000 in Toronto and most deals were closed by a fax machine," said Tim Hudak, chief executive of OREA, which has more than 70,000 members.

The previous Liberal government passed new rules limiting when real estate agents can represent both a buyer and seller in the same transaction. Those changes have not yet taken effect. It also doubled the fines for realtors and brokerages who violate the REBBA rules.

Tess Kalinowski is a Toronto-based reporter covering real estate. Follow her on Twitter: @tesskalinowski

"Whether consumers decide to consent to a transparent multiple offer process or not, they should have the choice under REBBA," according to the 33-page report.

The Ontario Real Estate Association (OREA) is recommending the province adopt a new open bidding process that could be a game changer for home buyers, who are currently forced to bid blind against competing offers in Toronto’s hot housing market.

It is a priority for CBC to create a website that is accessible to all Canadians including people with visual, hearing, motor and cognitive challenges.

Under the current rules, realtors aren’t allowed to share the details of an offer with anyone other than the home seller. That means consumers, facing competition from other buyers, have no idea what money or conditions they are bidding against.

One of the suggestions includes permitting realtors to disclose details about a competing offer to another bidder, if all sides involved agree.

The blind process has been blamed for driving up home prices in particularly fierce competition such as that seen in the Toronto-area real estate market in 2016 and early 2017, when it was common for a property to attract a dozen offers, sometimes more.

In a report Thursday, the group says the Real Estate and Business Brokers Act (REBBA), which was put in place in 2002, is in need of a revamp.

The market has since cooled, but less heated competition for homes continues, particularly in the city of Toronto.

“This would allow for all parties to put everything on the table and have a fully transparent offer process if they so chose,” said OREA president Tim Hudak.

A more transparent bid process is one of OREA’s 37 recommendations to the Ontario Progressive Conservative government, which is expected to update the 2002 Real Estate and Business Brokers Act (REBBA) that governs how real estate is transacted in the province. It’s not clear when that will happen.

“We are still in the process of being fully briefed on this file. We will provide updates once we have further information,” said an email from David Woolley, spokesperson for the Ontario Minister of Government and Consumer Services Todd Smith.

The former Liberal government started the process, raising the fines for realtors found violating REBBA. But their proposed changes to rules allowing one realtor to represent both buyer and seller were not enacted before this year’s change of government.

Opening up offers to competing buyers doesn’t guarantee the selling price of a home won’t rise just as it does here when buyers are trying to guess at what it will take to beat a competing offer, Hudak said.

In Australia where it’s common to hold public auctions on the lawn of a house, “the same sort of fever can grip you,” he said.

“We think that if this process is chosen it will give people time to weigh their decisions and decide if they’re going to improve their offer. It takes the circus out of what you see in open auction jurisdictions like Australia with the benefit of transparency,” said Hudak.

It would probably be up to the seller to determine if they want to opt for an open offer sale, he said.

Toronto Royal LePage agent Desmond Brown said the move “would be a huge game changer,” adding if people know what others are offering for a home, it would be an exciting step in the direction of greater transparency.

“There’s still too many questions that a lot of the losing agents are asking after the house has sold. People are always wondering how fair was the process was,” Brown said.

“It will probably stabilize prices a bit more because there are many instances where we’ve had winning bids that have been well over $150,000 more than the second-highest bid,” he said.

Under the current legislation, real estate agents are prohibited from disclosing any of the financial or other conditions of an offer. But the brokerage representing the seller has an obligation to tell other potential buyers how many offers are in play on the property, said Joseph Richer, registrar of the Real Estate Council of Ontario, the industry regulator.

The policy of not disclosing offers was likely designed to prevent agents and sellers from using competing bids to drive up prices, he said.

OREA’s report follows a yearlong review of the legislation by a task force made up of the heads of the country’s top real estate brokerages, including Sotheby’s International Realty Canada, Royal LePage Canada and Re/Max Integra.

The report also suggests tougher rules be introduced against those who operate as real estate “consultants” in an effort to avoid being required to register and train as realtors.

Hudak said his group has seen a growth in the number of people who act or pass off as realtors, but do not operate under the same legal and ethical rules. He said newcomers from Chinese and Korean communities have been the biggest targets by these consultants.

Reverting the total number of hours required to complete a realtor licence to 255 hours, from the newly decreased 120 hours (set to come into effect in 2019).

Allowing realtors to incorporate their businesses, which is permitted in B.C., Quebec, Alberta, Saskatchewan, Manitoba and Nova Scotia.

The previous Liberal government passed new rules limiting when real estate agents can represent both a buyer and seller in the same transaction. Those changes have not yet taken effect. It also doubled the fines for realtors and brokerages who violate the REBBA rules.

Tess Kalinowski is a Toronto-based reporter covering real estate. Follow her on Twitter: @tesskalinowski