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A couple of weeks ago I received a very interesting phone call from one of the associate producers of Yukon Morning, CBC Radio Yukon’s morning show. She was hoping to interview me about a big change recently announced by the Yukon Real Estate Association. On August 23rd they issued a press release announcing they were adopting a new client agency model, including representation for buyers. While it would normally be pretty unusual to ask an NWT real estate broker to weigh in on a Yukon real estate industry issue, in this case it kind of made sense, because about a year ago I stuck my nose into Yukon real estate industry business by writing a blog post on this exact topic.
I won’t rehash the differences between buyer agency and seller sub-agency in this post – I’m just going to assume that anyone reading this has read last year’s post or is otherwise familiar the issue. My intent here is provide some updates and my thoughts on the Yukon announcement.
Once published to our blog last year, the post received the same modest amount of traction these niche articles of mine usually receive, until it was shared by a couple of my Yukon friends and made its way onto the Yukon equivalent of our “Yellowknife Rants & Raves” Facebook group – and then all hell broke loose. There were dozens of comments and the temperature was pretty hot. Next thing I know I’m on vacation in BC and I’m taking a call from an angry Whitehorse broker who wants to know what my “deal” is. I received about a dozen e-mails and messages from buyers who were super frustrated at situations they had endured which would likely not have occurred had they had representation. I also received e-mails and phone calls from a few Yukon Realtors who thanked me very sincerely for bringing the issue to their attention.
It appears Yukon Realtors received enough feedback from the public that the issue made its way onto the agenda at the spring AGM. As it should have. And the attached press release is the result.
So, big change is coming to the Yukon real estate industry. Realtors will no longer be able to practice seller sub-agency – buyer agency will become the default relationship between home buyers and Realtors. That’s great news, and it even goes a step further than we’ve gone here in the NWT. But adopting these new measures successfully is not yet a slam dunk. Although the language of the press release is extremely promising, comments made by the President of the Yukon Real Estate Association at the start of my CBC interview, raise some red flags for me.
Let’s be clear about one thing – keeping buyer agency out of a particular market makes it easier for Realtors to double-end. There is a financial incentive to bar the door against buyer agency. And when new regulations which facilitate buyer agency are introduced, it has been my observation that, unless they are airtight, there are usually people who will find – even actively seek out – new loopholes or ways to lessen the impact of the new regulations. And this brings me to my “red flag.” If I were such a person, and had benefitted for years from the old double-ending-friendly rules, faced with the prospect of losing the battle I would try to make sure that buyer agency, although now technically possible, proves to be impractical. And the best way to do that would be to insist that real estate board members who choose to practice buyer agency have to enter into contracts with buyers.
Most people who are still reading this article know that many buyers are apprehensive about entering into buyer agency contracts. Or perhaps more accurately, they don’t like entering into exclusive buyer agency contracts. We’ve all read the national articles about buyers who did so, only to be ghosted by their Realtors, who later sued them when they bought a home through another, harder-working Realtor. It is totally understandable that people would have some misgivings about such arrangements. So, if a board were to insist on the use of exclusive contracts, it could potentially tip the scales back towards double-ending. Some, perhaps many, buyers would choose to be unrepresented rather than enter into exclusive buyer agency contracts.
And the real shame about such a potential turn of events is that the use of such contracts is not necessary. Our Canadian court system decided years ago that when a buyer works with a Realtor, even without any kind of written agreement, even without written consent by either party, the two parties find themselves in a buyer agency relationship. It is the default relationship between random buyer and random Realtor, once they proceed beyond, say, incidental contact at an open house. If the Realtor wants to get out of such an arrangement they have to make this clear, in writing, to the buyer, at the earliest possible opportunity. In other words, it requires paperwork to get out of buyer agency, not to get into it.
In the Northwest Territories, where we’ve been having this same battle at the board level since I got into the business in 2012 (which is my “deal,” as I told the angry Yukon broker), we have recently adopted modern agency disclosure forms that make all of this very clear to consumers. And although I personally don’t think it’s necessary, we do use an agreement, but it is very clearly non-exclusive. Buyers are entitled to enter into these agreements with every Realtor in town if they wish to do so, and only the one who assists them with the purchase of a home is entitled to a portion of the listing commissions.
The next hurdle we face here in the NWT is that some Realtors are outright refusing to use the new disclosure forms. And we can’t force them to do so unless we make yet another rule change at our next general meeting. And that’s why red flags go up for me when I hear a representative from the Yukon association saying that the use of buyer agency contracts will be mandatory.
As I mentioned in the interview, I don’t have all the details of the Yukon situation. It could very well be that I’m misreading things. Perhaps the contracts will be non-exclusive, and perhaps nobody is resisting their adoption. But my own experience has given me pretty good instincts when it comes to these matters. I think those Yukon Realtors who led the charge on introducing buyer agency and eliminating seller sub-agency still have some work to do.
At the end of the day, it is a shame that well-meaning Yukon and NWT Realtors have to fight over these issues, impose rules on themselves, and then find ways to enforce compliance. Rules about such essential consumer protection matters should not be self-imposed, they should be imposed on us by our regulators, the GY and the GNWT. I understand that there are a lot of higher legislative priorities in both territories, but at some point, our regulators are going to have to step up their game.
