B.C. real estate advisory group recommending bigger penalties, ban on 'double ending'

An interim report issued by an advisory group tasked with reviewing B.C.'s real estate industry suggests the need for both bigger fines and the end of deals in which realtors represent both buyer and seller.

In a letter to the chair of B.C.'s Real Estate Council, Independent Advisory Group head Carolyn Rogers says the task force is also considering whether or not self-regulation is adequate for the multi-billion dollar industry.

"Public confidence in the integrity of the real estate services sector and its regulation has been shaken," Rogers said.

"The public has rightfully questioned whether the self-regulatory powers granted to the real estate services industry continue to be appropriate and whether the industry is adequately fulfilling its obligations under this regime."

Shadow-flipping, double-ending questioned

The advisory group was put together in February following a series of revelations about the practice of "shadow-flipping" in which realtors use contract assignments to increase commissions by essentially reselling the same house several times without benefiting the original seller.

Those stories were followed by questions about double-ended deals and recent media reports alleging misleading and predatory sales strategies of some companies.

The province has already acted to crack down on shadow-flipping; Rogers says her group will monitor the effectiveness of changes to regulations.

But she said the group will also consider whether or not dual agency makes sense in B.C.'s super-heated real estate market.

"Real estate licensees are expected to act at all times, solely in their client's best interest," Rogers writes.

"It is difficult for most people to understand how this advice and this obligation can coexist with rules that allow a licensee to represent the interests of a buyer and a seller in the same transaction given the inherent conflicts between those parties' interests."

'The cost of doing business'

Rogers also says the public believes that penalties administered by the real estate council are so low as to be considered "the cost of doing business" for badly-behaving realtors.

She says the group believes penalties for unethical behaviour need to be increased.

The interim report also questions the power of trade organizations which represent the real estate sector. 

Rogers says some of the real estate trade organizations have taken on quasi-regulatory functions, which might stand at odds with the public interest in dealing with consumer complaints.

"These blurred lines appear to dilute responsibilities and accountabilities of the Council and make it unnecessarily difficult for consumers to navigate the complaint process," she writes.

Rogers says the group is concerned trade organizations are effectively "triaging" consumer complaints away from public transparency.

'We're not tinkering around the edges'

When asked by On The Coast host Stephen Quinn whether or not the Real Estate Council of B.C. should have been doing the things recommended in the interim report, Rogers said that in some cases, legislative changes would be required.

"The Council is, in some cases, limited by the legislation it's there to enforce," she said. "It doesn't have free rein to make all the rules."

"Sometimes it takes a stressed situation to reveal the weaknesses in a regulatory regime. And I think you can't really call the conditions we have in the Vancouver real estate market anything other than extraordinary."

Rogers said she looked forward to making more substantive changes in the Independent Advisory Group's final report, and said she was confident those changes would help restore public confidence.

"We're not tinkering around the edges. We're not fiddling with some small rules," she said.

A final report is expected by the end of May.

With files from CBC Radio One's On The Coast

To hear On The Coast's full interview with Carolyn Rogers, click the audio labelled: Bigger penalties, ban on 'double ending' recommended in realty report