Watchdog calls for real estate reforms, penalties of up to $250,000

Independent Advisory Group issues findings on alleged wrongdoing by realtors, issues 28 recommendations

A four-month probe of alleged wrongdoing in the real estate industry has recommended wide-ranging reforms, including higher disciplinary penalties of up to $250,000 for realtor misconduct, and up to $500,000 for agencies.

The Independent Advisory Group chaired by B.C. Superintendent of Real Estate Carolyn Rogers has issued 28 recommendations, many of which are designed to better protect the public from unscrupulous agents.

They call on the Real Estate Council of B.C. to undertake a major overhaul of its practices, implement a new ethics code, add disclosure rules and block licensees from engaging in certain practices.

The investigation came in the wake of revelations of misconduct by realtors in Vancouver’s overheated property market.

Several academics have cited an influx of foreign investment money, mainly from China, as a significant factor driving property prices up beyond the reach of many working people.

“I think what’s going on in British Columbia is that houses are no longer just homes, they are trading as investments, and that puts pressure on a regime that was never designed for that,” Rogers told reporters.

The IAG report lists several reasons for rising prices: a strong economy, people moving to the Lower Mainland from elsewhere in Canada and abroad, buyers “motivated more by investment considerations” than a need for housing, the “self-reinforcing market psychology that takes over in a period of rapidly rising housing prices” and the region’s geographic constraints – water, mountains, the U.S. border and the Agricultural Land Reserve.

The provincial government has already moved to block undisclosed shadow-flipping of contract assignments, where a home is resold at a higher price without the knowledge of the original seller to other buyers, allowing realtors to collect more commissions.

The report recommends those new rules – which requires the return to the original seller of  any additional profit from contract assignment – also extend to sale-by-owner property deals done without realtors to keep shadow flipping from merely retreating to an unregulated part of the market.

Another recommendation would ban realtors from buying or acquiring an interest in a listed property for which they are acting as agent.

It also would compel high-volume “opportunistic” buying of property directly from owners – sometimes known as wholesaling – to be subject to licensing standards.

A confidential complaints reporting system should be set up, it said, to encourage those in the industry or the public to raise concerns without fear of retaliation.

One of the recommendations would end dual agency, where a realtor can act for both the buyer and seller in a transaction.

The IAG report criticizes the Real Estate Council for failing to adequately enforce the rules it already has against unethical behaviour, noting it took little action against agents who were found not to be complying with other regulations, such as reporting requirements to counter money laundering.

The penalties go up from a current maximum of $10,000 for realtor misconduct and $20,000 for brokerages. Those have been denounced as rarely enforced, and merely a cost of doing business when they are.

The advisory group did not contemplate ending self-regulation of the real estate industry entirely.

“Ultimately that is a decision that only government can make,” the report says.

But it calls for at least half of the council’s 17 members to be appointed from outside the industry.

The province is expected to announce more measures tomorrow.

Finance Minister Mike de Jong has previously signalled he intends to keep the industry on a short leash.

“The report is a comprehensive examination of the practices and challenges plaguing the real estate industry right now, and paints a troubling picture,” de Jong said in an emailed statement Tuesday.

The benchmark price of detached houses in the Greater Vancouver area topped $1.5 million in May, up 37 per cent from a year ago.

The report cautions its recommendations are to ensure buyers and sellers are treated fairly but they are unlikely to stem Metro Vancouver’s soaring home prices,

Real Estate Board of Greater Vancouver president Dan Morrison said “stress cracks” in the system have opened from the rapid rise in prices, shining a spotlight on a few bad apples.

“The volume and what’s been happening in the market has created a situation that nobody anticipated,” Morrison said. “We’re happy to fix those problems to restore the public’s faith in our profession.”

IAG Report June2016 by Jeff Nagel

Just Posted

From left: Thomas Kuecks, David Lane, John Ivison, Denis Berger, Rod Gray, and James Kuecks are Cabin Fever. Catch their performance on the Cowichan Performing Arts Centre website. (Ashley Foot photo)
A&E column: Music Festival winners, CVAC awards, and Cabin Fever

The latest from the Cowichan Valley arts and entertainment community

BC Green Party leader and Cowichan Valley MLA Sonia Furstenau introduced a petition to the provincial legislature on Thursday calling for the end of old-growth logging in the province. (File photo)
Cowichan Valley MLA Furstenau introduces old-growth logging petition

BC Green Party calls for the end of old-growth logging as protests in Fairy Creek continue

The city-owned lot at 361 St. Julien St., which has been home to a temporary homeless site for more than a year, will be sold and plans are to build a three-storey mixed-use development there, Peter de Verteuil, Duncan CAO explained at a recent council meeting. (File photo)
New development planned for homeless site in Duncan

Lot on St. Julien Street would see three-storey building

Historian and longtime Citizen columnist T.W. Paterson photographs the historical wreckage of a plane on Mount Benson. Paterson recently won an award from the British Columbia Historical Foundation. (Submitted)
Cowichan’s Tom W. Paterson wins award for historical writing

British Columbia Historical Federation hands Recognition Award to local writer

This electric school bus is the newest addition to the Cowichan Valley School District’s fleet. (Submitted)
Editorial: New electric school bus good place to start

Changing public transit like buses to electric really is important.

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

Helen Austin performing with Trent Freeman at the 2018 Vancouver Island MusicFest. Austin is one of the many performers listed for the 2021 event.
Vancouver Island MusicFest goes virtual for 2021

Black Press to stream 25 hours of programming July 9-11

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Greater father involvement in the home leads to improved childhood development and increased marital satisfaction, says expert. (Black Press Media file photo)
Vancouver Island researcher finds lack of father involvement a drag on gender equality

Working women still taking on most child and household duties in Canada: UVic professor

FILE – A science class at L.A. Matheson Secondary in Surrey, B.C. on March 12, 2021. (Lauren Collins/Surrey Now Leader)
Teachers’ union wants more COVID transmission data as B.C. prepares for back-to-school

BCTF says that details will be important as province works on plan for September

Provincial health officer Dr. Bonnie Henry outlines B.C.’s COVID-19 restart plan, May 25, 2021, including larger gatherings and a possible easing of mandatory masks on July 1. (B.C. government photo)
B.C. records 120 new COVID-19 cases, second vaccines accelerating

Lower Pfizer deliveries for early July, Moderna shipments up

A Heffley Creek peacock caught not one - but two - lifts on a logging truck this month. (Photo submitted)
Heffley Creek-area peacock hops logging trucks in search of love

Peacock hitched two lifts in the past month

The Calgary skyline is seen on Friday, Sept. 15, 2017. THE CANADIAN PRESS/Jeff McIntosh
2 deaths from COVID-19 Delta variant in Alberta, 1 patient was fully immunized

Kerry Williamson with Alberta Health Services says the patients likely acquired the virus in the hospital

The first suspension bridge is the tallest in Canada, with a second suspension bridge just below it. The two are connected by a trail that’s just over 1 km. (Claire Palmer photo)
PHOTOS: The highest suspension bridges in Canada just opened in B.C.

The Skybridge in Golden allows visitors to take in views standing at 130 and 80 metres

Most Read