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Posts tagged ‘REBBA 2002’

4
Nov

Transparency at the Offer Table. Not Just a Pipe Dream

transparency blogAt a recent mastermind session our group talked about the frustrations we often feel when we are at the offer table. There are many opportunities for the evening to go wrong because the process is secretive and often skewed to favour the listing agent and there is always a chance that we, acting as a buying agent, will have to go back to the buyer and let them know that they didn’t get the house. Sure, it could be as simple as price, but as you know, there are many chances for error, incompetence or fraud.
So in our meeting, we wondered if there were a way to sell a home with complete transparency. Could we make the process so fair that everyone who offered and lost could walk away knowing they were given every opportunity to buy the house? We worked through several possibilities, talked through potential land mines, and played devil’s advocate on a number of different scenarios.
One of our solutions could be best demonstrated by this example. You’ve listed a property for $699k and have received 5 offers. You’ve told all the participating agents that you will be running the process as follows…after everyone presents you are going to meet with the agents collectively and disclose only the price of the highest bid. At that point you will give the agents 1/2 hour to speak to their clients and return, if they so wish, to participate in the second round. Four agents return for the second round and present their offers again and once more you meet with them and announce the winning bid. This process continues until there is only one agent standing. In many ways it mirrors an auction process but requires the skill of a buyer agent in negotiating fairly with the seller and the seller agent. All agents are present and counted for so there is no chance that there are phantom offers. At no time is it made clear which agent has the leading bid, nor does that agent know how close the other offers are. The winning offer is successful based on its merit (and or price) and there is no opportunity for shenanigans. In the event of an offer from the listing agent, the manager or someone else from the office manages the process and the listing agent is unaware of the other offers.
From the surface the idea seems to have merit until you dive into REBBA 2002, which is the Act that we must follow (in essence, our play book). In it, there is expressed direction that an agent does not have the right to disclose any terms of an offer even if directed to by the client seller. So if you liked the idea of a completely transparent offer night, don’t hold your breath.
It occurred to me that rules and regulations are brought about to govern the way business is conducted TODAY. When the way business is conducted changes, the rules (or laws) get updated. We see that happening today with the Condominium Act which was first enacted in 1998. Certainly a lot has happened in that world over the past 16 years and even with tweets and updates, one wonders if an act that old holds the answers to an ever-growing segment of the real estate market. Like the Condominium Act, I wonder if, when first established, REBBA 2002 could have ever imagined a market as strong and unrelenting, or something as strange (back then) as bully offers.
At the end of the day, the only answer is hard work. As the listing agent, our job is to run offer night in the most professional way which, among other things, means refusing to represent your own buyer. We need to keep the lines of communication open with every agent bringing an offer, explain the process that will steer the presentations and stick to them religiously, and above all be fair and honest to everyone involved in the transaction. For buyer agents, come prepared with your best offer, have a good deposit, and make sure your buyers are nearby. Keeping simple rules will make the transaction go smoothly, eliminate confusion, and keep everyone out of court.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

4
Jul

Don’t Do The Crime If You Can’t Do The Time

crime blogLet me start by saying unequivocally that I try to follow the rules. I tell my agents…work hard, make money, do the right thing, stay out of trouble and when in doubt, ask. These ideas have served me well. I suppose that’s why I get incredibly frustrated when others can’t do the same. I mean, is it too much to ask that we all compete with each other on an equal playing field? The reality is that there are plenty of opportunities to create an advantage in your business either through advanced technology, perhaps some service advantage or maybe it’s price cutting, and I should add here that I have no problem with any model that tries something different as long as it follows the laws that have been put in place.

But here’s the problem….lots of agents and companies are content to live outside the law because they know they either won’t get caught, they just don’t care or know that no one is going to turn them in. REBBA 2002 created the rules and regulations for which we must all adhere to and they are supposed to be administered by The Real Estate Council of Ontario. For the most part, the rules are not open for interpretation. They are black and white, not varying shades of grey. For instance the advertising guidelines are pretty clear. Display your true and legal name, your designation, contact information and above all clearly identify the company you work for (not place it in a footnote somewhere on another page). If you have taken your RECO update then you are aware that advertising guidelines form a major section of the course. So why is it that, on a daily basis, I come across advertising, whether it be in a website, on a sign, a flyer or business card that doesn’t comply? Simple. Agents know they can get away with it. They know Someone is not going to turn them in for not clearly identifying who they work for. It’s petty and a waste of time and the offender, if found guilty is likely to get a minor slap on the wrist or a $100 fine. Big deal. Call it the cost of doing business and quiet frankly does anyone out there have time to launch a complaint for a minor infraction? No. It’s hardly worth the time and to be quite honest, in my personal experience, many of my friends are breaking small laws like that here and there.

The truth is, I know some people who are breaking some pretty big rules too. Small companies that operate unregistered branch offices, agents that pay bird dog fees or knowingly disclose pertinent facts about competing offers. Frankly the list could go on and on and RECO is as much to blame because they won’t do anything unless you make a formal complaint. That means putting yourself out there, something that prevents most complaints from happening. So when an agent shows me a marketing idea that clearly breaks advertising guidelines I tell them that we don’t win THAT way. Their response? Well, so and so is doing it.

So what’s the answer? Well RECO could do nothing and people will continue to push the limits and before long we are working in the wild west OR RECO could adapt a DIS type service similar to that of the Toronto Real Estate Board. TREB’s DIS (Data Integrity Service) is an anonymous tip hotline for agents to complain about MLS listings. A similar system would keep RECO inspectors busy and initially we would see a huge spike in complaints and levied fines and like all hotlines there is always the possibility for abuse, but the goal here is to create a level playing field and nothing less. Complaints need to be backed up with proof and solid evidence. Minor or first infractions could be corrected with something a simple as a warning and a subsequent follow-up.. From there…sky’s the limit. It’s not a perfect solution and it’s probably filled with holes but the end result is clear. It’s time for our industry to get back to the business of buying and selling homes not looking for loopholes in a system that rewards rule breakers.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

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