By: Jacqueline Pennington
Dirty Double Ending
Tags: CBC, market watch, double ending, RECO, multiple representation, Port Hope Classic Homes, OREA, Cobourg homes for sale, port hope homes for sale, colborne homes for sale, Grafton homes for sale, real estate agents,
Many of us will remember the CBC Marketplace episode on Realtors breaking the rules of multiple representation on hidden camera. Although it garnered much media and real estate industry attention, I don't think many of us were really that surprised by what we saw.
Reviewing the data in our local Northumberland market, just over 10% of sales are "double-ended" meaning both the seller and the buyer are represented by the same Realtor. Now, 10% may seem like a small number, but when you look at that 10% in more detail the most concerning thing is the impact on sale price. In double-ended transactions properties sold for an average of 4% less (vs. list price) compared to transactions where the buyer and seller were represented by different Realtors.
Sellers often believe they are getting a "deal" when their Realtor also represents the buyer, and the Realtor will sometimes discount their selling commission if they represent both sides. But, unless your Realtor is giving you a 4% "discount" you're loosing hard earned equity.
Can you imagine if you were interviewing Realtors and one says: "I'm going to look after you and your interests in selling your home and get you top dollar… unless I get my own buyer and can double my commission. In that case, I'll sell your largest investment for about 4% less." It sounds ridiculous.
When done correctly and adhering to the rules as outlined in the Real Estate Business Brokers Act, representing both buyer and seller is completely legal and can be done in a fair and transparent manner. I do believe the vast majority of agents do not undercut their seller's interests when representing both sides.
But then we have the ones that the CBC episode featured; the known 'double-enders'. Those Realtors who don't just double end now and again but do it so frequently you could begin to think that it's intentional. In looking through local sales we have some Realtors double ending over 60% of their listings! That's a lot more than the 10% average. How does that happen?
Over a year has gone by since the CBC exposed the dirty business of double-ending in the real estate industry. A number of individuals were caught on film engaging in questionable sales practices and you might have expected agents to take a pause and revaluate their ways. But when I see Realtors continuing to double end 60%+ of their listings, it would seem many still see themselves above the law.
The Ontario Real Estate Association (OREA) appears to be taking a stand and has been lobbying the provincial government for rule changes and stronger enforcement. But OREA doesn't police its member realtors. The job of enforcing the rules falls to the Real Estate Council of Ontario (RECO), but as you saw in the CBC Marketplace segment and based on the data, the system is still failing the consumer.
So until we see a stronger stand on when double ending is dirty, your best defense is to ask your Realtor "whose interests are you really representing?"
Statistics used based on information obtained from the Northumberland Hills Association of Realtors. All opinions expressed in this blog are the sole opinions of Jacqueline Pennington