Toronto area real estate agents caught illegally referring clients
Properties listed with reduced commissions sell for less or stay on the market longer due to illegal handling practices
A CBC Market Survey exposes a pervasive problem among Toronto-area real estate agents who divert clients from properties offering lower brokerage commissions.
Investigation by CBC’s Tiffany Foxcroft and David Common found agents in Toronto would persuade customers to turn away sellers who list their own homes and offer less than the standard 2.5 percent to buyer’s agents .
CBC reporters worked alongside homeowners Joanne Petit and her husband Frank, who self-listed their home in a neighborhood in the Greater Toronto Area (GTA) on MLS through an online price brokerage. reduced. They were offering a one percent commission to the buyer’s agents.
The Canadian network sent reporters posing as buyers to three top real estate agents in Google searches for that neighborhood, looking for homes that matched Petit’s criteria. According to CBC, two of the three agents lied about the house, claiming it was too expensive or that sellers would not answer the phones, deliberately driving undercover reporters away from the house because their earning potential would have been reduced by about $ 36,500 to about $ 14,600.
In light of the CBC investigation, the Ontario Real Estate Board warned agents against such practices: “In addition to being illegal, the conduct undermines consumer protection, the trust of consumers and the reputation of the real estate profession as a whole.
Toronto Realtors Respond to Pilotage Practices
“I really see this happening,” said NOW RE / MAX Hallmark real estate broker Meray Mansour of the leadership. She agrees with the CBC survey, which also surveyed 50 real estate agents across the country, concluding that the management problem is pervasive in Toronto and beyond, and offering a lower commission to buyer’s agents. will make your house black. “I just notice from my research, if they offer one and a half or two percent, the property sells for less or takes longer to sell.”
Mansour adds that she too cautions her clients against reducing buyer-agent commissions for these reasons.
“I’ll take less money than risk offering less money to a cooperating agent, because I know [steering] is something that happens in the industry.
Phil Kocev, broker and managing partner at iProRealty, found the CBC’s findings “very disappointing” and “unfortunate”. He did not notice that driving is too frequent a practice. And he also explains that realtors, who are obligated to show clients every property that meets their needs, have more honest ways of dealing with the reduced commissions in the Buyer’s Representation Agreement (BRA), where all the terms and percentages are stated.
“If we come across a property where the commission is lower than what you and I agreed in the ARO, then we need to have a discussion and decide if we want to continue and move forward,” says Kocev.
He adds that it may already be stipulated in the ARO that the buyer could be held responsible for the commission difference.
“As a client you can decide, ‘No you know what, I’m not going to pay that price for this house and I have to manage the commission. “So let’s move on.”
And while Mansour and Kocev understand why some sellers may choose to list properties without representation to save tens of thousands, they also point out why agents can be helpful and take care of the paperwork and presentation of a home. is not for everyone.
“A lot of agents find it difficult to deal directly with salespeople,” says Kocev. “It certainly happens more smoothly when you work agent to agent because we know the process. We know the properties in the area. Often, salespeople are not fully informed of the process. They don’t know the forms, the clauses, the way things work, even how you are doing counter-offers back and forth. It can be a difficult process. “
“It’s a different ball game,” says Mansour. “I know how to present properties in a certain way to appeal to the demographics of the neighborhood. All of these things are important in terms of selling your property. Saving one percent on average is going to be $ 10 or $ 20,000 on a property. I could probably negotiate and get you another $ 50,000. You have to weigh it.