The letter I am a very annoyed Realtor offers up frustration with the limitations imposed by existing rules and a lack of “meaningful rules”. I agree with the sentiment. Changes to the behaviours, systems and regulations could do some good.
The suggestion that making a real estate offer is like bidding at an auction is not a fair comparison.
At auction you may know the person bidding (perhaps the bidder’s agent) and you know the price. Public auctions are simpler customer (not client) style transactions. Their healthy mix of buyer beware is related to what is best described as goods of a one-dimensional nature on the auction block. The professional real estate offer presents greater details that are deservedly private: the buyer(s), the specific detailed terms related to financing, inspection, warranties (or not), vacant possession or assumption of tenancies, other proprietary and creative approaches built in to offer terms, whether they are granting the seller control over amending a completion date, the amount of deposit and so forth.
They are not the same thing.
Perhaps the letter writer had construction industry bids in mind, notably public projects. Usually the only information disclosed at the public opening is the bidder’s name and price. While this seems like a reasonable approach, those bids include significant detailed information and terms not disclosed to bidders and which are further assessed in private. Bidders are known in advance (often pre-qualified). A private analysis of the bid completeness or compliance impacts on the final acceptance. This is not a real comparative approach either.
While there has been success elsewhere from quasi public opening of offers for certain jurisdictions, one must consider that success in the context of the particular regulatory reference. There is insufficient information in the letter to make this comparison a clear winner.
Recognizing buyers and sellers have different interests on offer terms (requisition date, warranties, seller disclosure) it is no surprise to understand “transparency” brings differing impacts upon the parties. Pushed to disclose all offer information, especially as it cannot be absolutely in their respective interests, one should expect there will be a stampede to the lawyer’s office, where confidentiality of the legal community offers more protection.
Knowing why the suggested specific transparency is necessary would assist in developing a focused solution. The idea of “wide open” transparency fails to acknowledge bidders have privacy rights, hence any transparency must be limited. Sellers also have privacy rights harmed by disclosure of accepted offer details; for instance exposure from not taking what appears on the surface to be the highest and best offer.
Our system legitimatizes our performance through the oversight of the provincial regulator, who is available to examine an offer process where one suspects foul play. Protection of the public is done with privacy of the parties upheld.
Remarks about the lack of meaningful rules is spot on. However, the suggestion we Realtors are not at fault mistakenly ignores that the profession advocated for much of the existing regulatory framework and we control the MLS system as well as our own organized real estate membership qualifications. This is observation is not to advocate for more organized real estate rules, it is to note the idea we are not responsible for what ails us is not universally accepted.
The letter further suggests the requirement all listings have a seller performed property inspection. The idea does not go far enough. We should turn the cards upside down and make it a seller’s obligation to disclose (therefore investigate) material facts and information and eliminate it from being the buyer’s sole obligation. For most situations, this benefits a seller. They offer clear, unambiguous product information the buyer can rely on, leading to less risky offers and better pricing. In such circumstances it remains for the buyer to give weight in favour or against property value with respect to what is reliable information.
However, such an approach will likely and dramatically change the way agency manifests, making REBBA 2002 multiple agency obligations redundant. Perhaps that is what holds us back from relieving the frustration talked about in the letter.
Re/Max Escarpment Realty