Is it unethical for a real estate agent to “double-end” a sale? Can a listing agent fulfill his/her fiduciary duty to his seller and a buyer for the same property? Can this situation be fair to all parties involved or can the situation be abused if the agent is driven by his own increased financial gain?
CBC’s consumer advocacy program “Marketplace” will air a piece on exactly this subject at 8:00 pm today. Using reporters pretending to be buyers and hidden cameras the investigative piece reveals 6 out of 10 agents contacted were willing to use their Multiple Representation position to ensure their Buyer client won a bidding war on the agent’s own listing.
So let’s clarify.
Multiple Representation is legal in Ontario and must be disclosed and agreed to by all parties in advance of any negotiations. Agents are obligated to fully explain how that situation effects all parties. “Agent” also means the whole “Brokerage” not just the individual Sales Representative handling the transaction. Therefore Multiple Representation occurs when their are two agents from the same firm working for the Seller and the Buyer. This is very common practice and if handled properly and openly is a win-win for the clients.
In our Brokerage, which brokers over 60% of all residential real estate transactions in Belleville, we handle hundreds of such transactions every year. Our team alone handles many of these types of transactions without incident. Both Sellers and Buyers are treated fairly, openly and with zero exchange of confidential information.
An effective, open and fair negotiation process is the best way to reach everyone’s goals.
What if there are several offers on the same property? This is where ethics and fairness can breakdown. The individual agents’ greed can take over their ethics and better judgement. This is the scenario that Marketplace is investigating. When a listing agent controls the presentation of several offers, including one for his own buyer, there is a lot of potential for abuse. The Buyer could pay too much and/or the Seller might not get as much as they should have.
The agent however makes a killing and the clients might be none the wiser. It’s important to remember that in most cases the Buyer and the Seller are both “clients”. The have an “agency’ relationship with the Brokerage and the representative.
This behaviour and these tactics blatantly contravene several sections of the Real Estate and Business Brokers Act (REEBA-2002). The most obvious is Section 4. titled “Best Interests” which reads
4. A registrant shall promote and protect the best interests of the registrants clients.
Remember that usually both Seller and Buyer are “clients” who are entitled to full disclosure and fair and honest treatment.
When members of The Platinum Team encounter this situation, we immediately involve our Broker or manager. We inform all agents and Buyers that the offers, including our own, will be presented to the Seller by the Broker and in private. One could argue that the offers are still being handled by the listing brokerage and there could still be abuse of that control. A brokerage however has much to lose by handling this situation improperly. An ethical brokerage sees the big picture and securing one deal unethically is not good for business.
The scenarios revealed by the Marketplace investigation are inexcusable.These agents are abusing the multiple representation and multiple offer situation strictly for their own gain. Their actions only add to the negative reputation suffered by our industry and its practitioners.
This program will get a lot of “I knew it!” reactions. There might be even more vitriolic responses. It will not help the image of our profession which already struggles with issues of consumer distrust. Actions like this make it even harder for ethical, client focused agents to build trusting relationships with new clients.
These actions contravene our industry’s rules and should be reported by anyone, agent or client, who witnesses them.