Double Trouble: New Legislation to Restrict Unethical Real Estate Practices

Last spring, the Province announced, as part of its Fair Housing Plan, that changes would be coming to the way real estate agents operate in Ontario.

This announcement followed a disturbing exposé on national T.V. about some agents compromising clients’ best interests, breaking rules to ensure they could “double-end” deals.

So, what is double-ending and why is it so bad?

Simply put, a double-ending real estate salesperson represents both buyer and the seller in the same transaction. Double-ending is not a bad thing in and of itself: often buyers believe they will get a better deal by using the seller’s agent since, in theory at least, the agent can cut his or her commission and, in theory, that amount will come off the purchase price and directly into the buyer’s pocket.

Many very good, ethical agents will offer a
discount to the seller in the event they are able to double-end and there is nothing inherently wrong with that. It seems fair.
With the kind of agent who will put her clients’ interests first and above her own very substantial monetary interests and can keep each side’s bottom line and vulnerabilities confidential, carefully balancing the parties’ best interests, double-ending is perfectly okay. The problem is human nature. This level of selflessness is just not universal.
One of an agent’s responsibilities is to write up the contract for one of the biggest financial
expenditures you’re ever going to make. Can one person put your best interest first in making sure the many terms of the contract protect you, while legally bound to do the same for the other person?
Currently, a listing salesperson can technically avoid double-ending by establishing a written “customer service relationship” with a buyer.
Then she can sell the property to you without
your own agent—and she no longer has to act in your best interest. Salespersons have a lower
standard of care in dealing with customers
than with clients. She is no longer viewed as
“double-ending” under applicable ethical rules,
but she still gets both sides of the commission.
In the seller’s case, if your agent is intent on
double-ending, he will try to ensure his own
buyer gets the property and may put off other
agents from showing your property! Signs of
double-ending include:
• Bad photos of your property
• Discouraging other agents from showing it
• Setting an arbitrary deadline for showings.
I once encountered this situation where the agent suddenly shortened the deadline to cut off additional other agents’ buyers coming through. Unfortunately it is hard for sellers to know
this stuff is going on
• Actual harassment or rushing of other agents’ buyers
• Demanding that other agents disclose the amount of their offers prior to multiple offer presentation
• Quick delivery of an offer from his own buyer on or near the listing date without attempting to generate other interest in your property. Sellers often think this means they have a great agent and it could, but not always
• No effort to get the seller to have the property
looking its best

Any one of these may not necessarily mean double-ending; however, use of these tactics may substantially reduce demand for the property and could result in hundreds of thousands of dollars off the sale price.
In December, Bill 166 passed allowing for “mandatory designated representation.” This will likely mean, once details are established, that a listing agent would have to get a different agent to represent any buyer that comes to her directly.
Re/Max Hallmark has required its agents to use designated agency in multiple offer situations for over a year now as a matter of ethics, even though not yet required by law.

Leslie Whicher is a real estate salesperson with Re/Max Hallmark York Group Realty Ltd.
and a member of the Ontario bar. She welcomes any questions about your home or the local market.