TRESA – Refined Real Estate Team

You can see it Tuesday at 9:30 AM or this Friday at 7:50 PM.

Jeffrey Luciano — Fri, 26 Jan 2024 18:46:30 +0000

Despite advances in technology like 3D virtual tours and the ease of having high resolution photos of every nook and cranny of a property, in person showings remain a key part of real estate sales and rentals.

There are a number of rules that exist that need to be followed, but just because they should be followed doesn’t mean they always are! We thought we’d go through how it’s supposed to work and how it actually plays out.

Let’s start with the basics.

Of course, you can show your client the home!

One of the most basic rules of showing real estate is that a licensed real estate agent is the one showing the property to a potential buyer or tenant. After all, while a seller or landlord may understand that in order to get the best price, people need to come see the home, they don’t want strangers wandering around the property without supervision.

Under the old legislation governing real estate in Ontario (REBBA) agents were expected to be present during any access to a seller’s property and to obtain the seller’s consent prior to granting access to a property without an agent present. With the new legislation (TRESA) in place as of December 1st, 2023, things are a bit more specific.

An agent must not provide any person access to real estate unless:

An agent is present with the person, or
The seller has consented in writing to the person having access without an agent being present.

It is expected that the seller’s agent will be present each time access is granted unless the seller has expressly authorized otherwise. The buyer’s agent is expected to be present and to continuously supervise the people granted access.

The above is very clear and that means agents are always present for the showings, correct?

As crazy as it sounds (and it is mind-boggling to us), there are occasionally reports of agents booking a showing and then sending their clients on their own. It’s a violation of both TRESA as well as the local MLS rules and it is a sure-fire way to get fined and possibly have your registration revoked. If anything happened at the property, whether items go missing, property is damaged or someone is hurt, the agent who booked the showing would be in a world of trouble.

Thankfully, such incidences are quite rare, with the vast majority of showings taking place under the supervision of a licensed and insured real estate agent.

We’ll pop by whenever works for you.

When a showing of a property for sale or lease is made, it’s not an open invitation for the agent to show it whenever works. Instead, the showing agent requests a specific time or date that fits within the showing schedule that the listing agent has received approval for from the owner.

The conversation we have with our clients who are selling their home about a showing schedule goes over how we need to balance the realities of the occupants of the home with the desire to make the property as available as possible.

If a home is vacant, than showings are allowed anytime (within reason, as a middle of the night showing isn’t helpful for seeing the home, nor for keeping neighbours happy) with no notice. This is the ideal situation for making it as easy as possible for a prospective buyer or tenant to see the home with their agent whenever they want to do so.

In many cases, the occupants of the home (either the homeowners or tenants) need to continue living in the home, which means we come up with a schedule of allowable times for showings and required notice that works for them. Often this means no showings during certain times, such as when the baby is napping and we almost always have at least a two hour notice period for any time slots that are booked. This allows the occupant to plan to leave for the showing without a huge rush.

There are special considerations when dealing with rental properties. Access to rental properties or rental units requires that the property owner, or landlord, provide notification to the tenant, in accordance with the law. If the tenant was not properly notified in advance, the tenant may grant permission if asked, but has a right to refuse access.

Section 27(2) of the Residential Tenancies Act provides that the landlord, or, with the landlord’s written authorization, a registered real estate agent, may enter a rental unit provided that they have given written notice to the tenant at least 24 hours before they enter to allow a potential purchaser or new prospective tenant to view the unit.

Regardless of whether it is vacant, owner occupied or tenant occupied, an approved showing is for a specific real estate agent to show the property at a specific date and time. If Jeffrey Luciano is sent approval to show the property at 2:30 PM for a half hour, on January 26, 2024, then that’s the only time slot that Jeff can show the home. If he’s going to be late or early or not make it at all, he has to contact the listing brokerage to request a change in the time or to notify them is cancelling the appointment.

There you have it, listing agents set reasonable showing schedules that work for the owner or tenant living at the home, showing agents book a showing and show the property during that time. That just makes sense, right?

Sadly, this is probably the biggest source of frustration in the showing process, on both ends of the equation.

On the booking agent side of things, we often see listing agents that set very restrictive showing parameters. While it may not be as extreme as only 9:30 on Tuesday morning or for 10 minutes late Friday evening, it is pretty common to see very limited windows of time available. We’ve seen listings where it is only one specific afternoon on one day, as well as some that only allow during the day, but no evening or weekend showings. While we do know that it is disruptive to the occupants to have showings interrupting their enjoyment of the home, it is a necessary evil in order to get a home sold or find a new tenant. A listing agent who doesn’t push back against very limited showing opportunities is doing their client a real disservice, as fewer showings means fewer offers and a lower sale price.

On the showing side of the equation, it is embarrassingly common to have agents treat a booked showing time as a goal to shoot for, rather than the only time they’re allowed into the home. We have seen agents show up late on countless occasions, where they are trying to start their showing well after the showing period has ended. It’s disrespectful to the occupant who has often left for the showing and in many cases it means that the planned showing doesn’t actually happen as the occupant isn’t able or willing to accommodate the new time. We’ve even heard of agents going back to a home for a second showing on another day without actually booking it at all! While being a few minutes early or late is often accommodated by the occupant, showing times and duration is set in stone and should be respected.

OK, we’re in the home. You go wild, while I make a call.

Showing up to meet the client at a property at the booked and confirmed time slot is a great start to a showing, but there are additional rules as to what can be done while at the home.

Under TRESA, the wording that focuses on this is about how the real estate must exercise care, both in granting access and when granted access to a property. This means that agents must ensure close supervision during access. While it seems wild to us that this needs to be specified, the wording is quite clear.

If you are representing a buyer and make an appointment to show a property, you must remain in attendance for the duration of the appointment and must not leave other people unsupervised on or in the property.

We know what you’re thinking – the agent has to not only show up at the time they booked and let their client in, but they also can’t leave to run an errand or sit and make calls while the people wander through the home? It truly is an unreasonable standard.

In all seriousness, it is very important for agents to ensure that their clients remember they are in someone else’s home and that they should act accordingly. Unless expressly permitted, furniture, appliances, and personal items should not be touched or disturbed during access and bathrooms should not be used. Similarly, bringing food or drinks is frowned upon.

Do buyers and their agents follow these rules when in a home? The answer is unfortunately not all agents exercise proper control over their clients and not all visitors to a home treat it with respect. Whether it is ignoring the sign asking them to remove their shoes, opening bedside tables that are not being sold with the home or having a snack while checking out the bedrooms, the stories of poor behaviour are quite common. While children or babies are often brought on showings for understandable reasons, bringing pets is not permitted. Yes, people sometimes bring their dogs into a home for sale, and yes, accidents have happened.

In recent years we have seen the rise of more recording devices in homes, particularly in smart homes where the owner has invested in technology around the home. It is not uncommon now to see a sign on the front door or in the kitchen saying audio video recording devices are on and that you may be recorded.

Speaking of recording video, let’s talk about another aspect to showings that is a more recent development.

I’m just gonna take a quick video for my followers. Cool?

Social media is filled with videos these days of real estate agents giving tours of properties and commenting upon it. While the idea may be that any publicity is good publicity, under TRESA, taking photographs of a property or making video recordings is not permitted unless expressly authorized by the seller.

In theory, every video that is taken and posted was done after that real estate agent contacted the listing agent and received permission to do so. In practice, many agents seem to forget that while a home for sale may be the agent’s place of work for a half hour, it remains someone’s home. Taking your own photos or videos and putting them online for anyone to view needs to be done with permission and approval of the owner.

We have definitely seen the rise of “showings” where the agent is in fact there by themselves with the purpose of taking a video to share on their social media accounts. This is particularly prevalent for listings that are glamorous or likely to attract lots of attention from their followers. A recent loft listing saw us receive over twenty requests for permission to take a video!

Safety first. Also, safety last.

Let’s finish off with a word about safety.

On the listing side, it is the expectation that the home will be safe to show.

This means that a seller or landlord will make sure the home has lighting in place to allow showings to take place safely and that there will be no hazards that are not clearly communicated.

For showing agents, this means they will keep the lockbox code provided to them to gain access to the keys to themselves and that when they leave, they will ensure that the property is once again secure.

Pretty reasonable expectations? We think so, but this is another area where things often go wrong in showings.

On more than one occasion, we’ve gone to a showing to find an unattended dog on the other side of the front door, very angry at our desire to come into the home. Sometimes, the lockbox isn’t where it was supposed to be, or it’s there but the code is wrong, or the keys aren’t inside.

On the selling side of the equation, there is not much more upsetting than returning to your home after a booked showing to find that the agent who was there left without locking the door or even closing it. As insane as it sounds, we have heard of numerous stories of back doors being left wide open, front doors being unlocked and lock boxes left open with the code showing.

Security and safety is an integral part of the rules and regulations around showing real estate and we’re working hard to make sure that our industry as a whole steps up our game! The new TRESA legislation has increased oversight and fines for real estate agents who don’t follow these crucial rules, and we’re glad to see that happen.

Despite the rise in popularity with virtual showing tools like 3D tours, floorplans and high definition photographs, in person showings remain a crucial part of the real estate transaction in almost all cases. There is truly no substitute for getting a feel for the neighbourhood or building and for seeing a home for sale or rent with your own eyes.

If you’re thinking about buying or selling a home, we’ve developed ways to make it as smooth and stress free an experience as possible. If that sounds good to you, don’t hesitate to get in touch.

So, what’s that mean in plain language?

Jeffrey Luciano — Fri, 29 Dec 2023 21:06:16 +0000

As of December 1, 2023, the legislation governing the activities of registered real estate companies and their agents engaged in the selling of real estate in Ontario has changed. The prior legislation, REBBA, has been replaced with the Trust in Real Estate Services Act, or TRESA.

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is there is now a plain language guide that people buying, selling, or renting real estate receive from their real estate agent. It’s now a requirement that this RECO Information Guide be shared by the real estate agent(s) involved, prior to providing service or assistance to people with a real estate transaction.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you hopefully had a conversation with your agent where they went through the paperwork with you in their own words and answered your questions. While that still can happen, under TRESA, there is now this new information guide that makes things clearer.

Let’s review what the RECO Information Guide covers and what it means. Yes, we’re giving you a plain language interpretation of a plain language guide.

Speak plainly sir!

Under the previous legislation (REBBA), there was an expectation that real estate agents go through all paperwork, whether it be on the buy or sale side, and make sure it was understood by the people signing.

Under TRESA, it is the RECO Information Guide that takes on providing clear, concise, plain language information to help buyers and sellers make informed decisions.

While this doesn’t mean that an agent can’t or shouldn’t explain the documents, it does provide a failsafe of sorts, where a lazy or unethical agent couldn’t skip over explaining certain aspects that they’d prefer not to focus upon.

An agent can fulfill their obligations under TRESA now by:

Giving a copy of the guide to a prospective client before providing any services to them, or to a self-represented party before any assistance is provided.
Explain the contents of the guide to the prospective client or self-represented party.

What if I don’t have my own agent for a deal? Do I still get this guide?

As previously discussed in another article, under TRESA, you’re either a Client of a real estate agent or a self-represented party.

Even if you decide not to work with a real estate agent as their client, you will still receive a copy of this information guide. Where the person is a self-represented party, the guide supports conversations about the risks of proceeding without a real estate agent, clarifies that the agent is representing a party on the other side of the transaction and is obligated to act in the best interests of that party, and encourages them to seek independent professional advice before proceeding or receiving any assistance from the agent.

While self-represented parties, by their very nature, aren’t interested in the advice or support of a real estate agent, it is very important that they understand what role the agent will play in the transaction if they decide to not sign up as a client of the agent. As such, a plain language guide to what it means to be self-represented is a tremendous step forward.

What’s in this information guide?

The guide contains five sections:

Working with a real estate agent
Know the risks of representing yourself
Signing a contract with a real estate brokerage
Understanding multiple representation
How to make a complaint

As the sections are fairly self-explanatory, we’ll just highlight something in each section we thought was worth noting.

In the first section, not only does it explain what your agent can do for you as a buyer or seller, it also clarifies your responsibilities as a client. While some strike us as a bit silly, such as you need to respond to your agent’s questions quickly, others are quite important, such as where you’re expected to share all information that might be relevant to your situation. It’s a simple reminder that sharing information with your agent can avert problems before they happen.

The second section covers the risks of being a self-represented party and while that could be interpreted as one more pitch to come on board as the client of an agent, it is actually more helpful than expected. Sometimes people think that not having their own agent on their side (whether it is buying or selling) means the sole agent works for both parties. This section makes it clear what you’ll need to do on your own if you’re a self-represented party and that’s very helpful.

The third section is all about the contract you are signing with a brokerage as either a buyer or seller and it covers off the key details of the scope of the contract, the services being provided, as well as the payment amount and terms for the services. Finally, it goes over in detail how terminating a contract works, expiry dates and so forth. Given the listing contract or buyer representation agreement is where the most legalese can be found, it’s great to have plain language wording here that says what those documents cover.

The fourth section is focused solely on multiple representation, where an agent represents multiple clients in a transaction. This is different than a client and a self-represented party, as it means actually having multiple clients in the transaction. While we rarely do multiple representation on the Refined team, it is an option that can make sense sometimes, so we’re glad to see it explained very clearly. This section also talks briefly about the open bidding or open offer process, which we reviewed in detail in another article. It feels like this is a strange add-on for this section, but it’s likely because lots of aspects of the open bidding process are still unclear. We’d anticipate that over time, this information guide may include a stand alone section on open bidding and how it works.

The final section is about how to make a complaint about the conduct of a real estate brokerage or agent. Initially we were on the fence about including such a negative topic at the end of a required document, but upon consideration, we are glad it is here. While on our team we hold a high standard of behaviour and address concerns quickly, it is a sad truth that there are some agents and brokerages who make it hard to complain – or have those complaints addressed. This mandatory document including the specific ways to make a complaint could result in better behaviour across the board, and if not, a quicker path to resolution for unhappy clients.

We’ve always spent time on clarifying and explaining real estate documents to our clients, so we’re glad to see that this new RECO Information Guide is following the same approach. If you’re thinking about buying or selling and want some direct answers to your questions, don’t hesitate to get in touch.

Excuse me, would you mind opening that offer for me?

Jeffrey Luciano — Fri, 22 Dec 2023 17:35:16 +0000

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is that it is now possible to have an open offer process – well, sort of open.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you would have most likely been part of a closed offer process, where if there were multiple parties bidding on a property, only the selling side knew the details of those offers. If you were successful in your bid, did you “overpay” by a little or a lot compared to the other offers? You likely didn’t know the answer to that question and you hoped you managed to get it for just a buck more than the other people.

Let’s review how under TRESA, sellers now have the option of following an open offer process or at least a slightly more open offer process.

Open up!

Let’s start with the basics, namely what is an open offer process?

As the name implies, it means that the Seller can choose to share contents of an offer, as opposed to how it was under the previous legislation, where a Seller (and their agent) were prohibited from sharing the contents of an offer with anyone else. Real estate agents often got into hot water by violating this rule and it no doubt contributed to the perception of unfairness in the offer process.

Here’s the specific provisions in the new legislation (TRESA) about competing offers.

22.7.

(1) If a brokerage that has a seller as a client receives a competing written offer, the brokerage shall,

(a) communicate the number of competing written offers to every person who is making one of the offers; and

(b) if the seller directs, share the substance of the competing written offers with every person who is making one of the offers.

(2) For the purposes of clause (1) (b), a seller may direct that only parts of the competing written offers be shared.

(3) Information shared under clause (1) (b) must not include any personal information of the person making the offer or any other information that would identify the person making the offer.

Let’s break that down shall we?

The bit in Section 1A is the same as it has been for the past twenty years, where the listing brokerage has to notify the number of competing offers to everyone who is part of the bidding war. To be clear, this doesn’t mean to everyone regardless of if they have submitted an offer. While listing brokerages often notify every agent who has shown the property when offers are received, that is more about trying to drum up competition and not a legislative requirement. The only real requirement is that anyone who has submitted an offer is kept in the loop about the number of other competing offers.

It is the wording in Section 1B that is new, where if a seller decides to do so, they can share the substance of the competing offers with everyone who has made an offer.

Section 2 further clarifies that the seller can chose to share only parts of the offers and isn’t obligated to share the full offer or even specifically mandated aspects, such as price, closing date or conditions.

Section 3 then adds in that regardless of what a Seller chooses to share, they can’t share anything that would identify the name of the person making the offer. This also would mean they can’t share anything in the offer that would allow the other parties to figure out who the buyer is, such a condition on the sale of the purchaser’s property located at X address.

So, it’s more open, but maybe not fully open?

The lack of specifics around what may be shared means that we will absolutely see differences between sellers as to what they want to share with the bidding buyers on their home.

One seller may decide he’s only sharing the amount being offered, another seller may decide she wants to share the amount and closing date and another seller may decide they want to share which offers have conditions and which don’t, but that’s it.

Ok, but it’s either closed or open and I’ll know which one, right?

One interesting quirk in this new ability to share some or all parts of competing offers is that there is no actual requirement for the Seller to decide upon and stick with this approach.

A Seller may direct their agent to start with a closed offer process and then change their mind and tell their agent they want to do an open offer and share X aspects of each offer, then change their mind again and say actually they only want to share Y aspects now.

If that sounds confusing, it’s because it is confusing.

Basically, if you’re on the buy side of a deal, you need to be prepared for the seller to choose an offer process that best suits the situation and for it to potentially change.

Consider a situation where the seller notifies buyer agents it will be an open offer process with price and closing date to be shared with all competing buyers.

On offer day, the seller gets three offers and one is a lot more than the other two, so they decide to switch to a closed offer process and give everyone the opportunity to make changes to their offer but not disclose the substance of any of the offers.

Or perhaps one of the offers is firm and the other two are conditional upon financing and the seller decides to switch to a partially open process and rather than sharing the price and closing date, they will not share either of those facts, but they will share that one is firm and two are conditional, in the hopes that the conditional offers decide to remove their conditions or increase their price.

We anticipate that multiple offer situations will be a lot more complicated with these new options and the current lack of specifics for what will be shared amongst competing buyers.

Is there any benefit to buyers?

If the above makes it seem like this is good for sellers but even worse for buyers, it’s not 100% bad news. Some sellers who dislike the blind bidding system and who simply want a “fair” price for their home may reveal all relevant information and allow buyers to make an informed choice.

Buyers who hate the idea of overpaying for a home and effectively bidding against themselves due to not knowing the substance of other offers may choose to only bid on homes where the offer process is open. We have often had buyer clients who refuse to participate in multiple offer situations because they dislike the blind bidding process, so the new legislation at least gives us a slightly expanded pool of properties where they would feel comfortable submitting an offer.

Is this change a good thing?

We’ve largely been in favour of the changes put in place with TRESA, but we’re not sure about this one. It allows sellers to pick and choose between which approach best suits their situation and to change the approach depending on what happens.

The offer process was already a stressful and difficult situation for many buyers and sellers, but at least the rules were clear and a good real estate agent could help get you mentally prepared for what would take place.

Under the new legislation, we’re going to have go through lot more possible scenarios with our clients on both the buy and sell side. While we’re confident we can navigate it to get the best results, it does seem likely that it will cause additional confusion and stress for the parties involved.

If you’re considering buying or selling real estate and want to work with agents who know how the new rules work – and how to protect your best interests – then get in touch!

You look great, very representable.

Jeffrey Luciano — Fri, 08 Dec 2023 19:28:18 +0000

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is the changing of how representation works in real estate deals.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you were represented by a brokerage, not a real estate agent. That sounds counter-intuitive, as you would have felt like you had “your” agent and might not have particularly cared which real estate brokerage they worked for as long as you had them on your side.

Let’s review why that common misconception existed and what’s changed under TRESA.

Wait, you mean my agent wasn’t actually my agent?

Under the older legislation, REBBA, all of the paperwork you signed actually had you hiring the brokerage rather than your specific agent. In practice, you knew who you were hiring and who would be working with you, but in principle, it was the brokerage you hired to help you buy or sell, not that specific agent.

This wasn’t particularly relevant if you bought or sold with an agent on the other side from a different brokerage. As long as you were happy with the work “your” agent was doing, it didn’t really matter that the paperwork was actually with the brokerage.

This structure did, however, lead to multiple representation being much more common. This is because if your agent was selling your property and another agent from their brokerage ended up representing the buyer for the property, you were technically in multiple representation. Even though there were two agents involved, they both worked for the same brokerage and both the seller and the buyer had their representation paperwork with that singular brokerage. As such, the brokerage was representing multiple parties and that had to be disclosed and the rules around multiple representation followed.

When a brokerage is in multiple representation, the brokerage and all its agents must now treat each client in an objective and impartial manner, and not provide any advice that might put the interests of one client ahead of the other. This means the two agents involved must not offer advice on matters such as the price or other terms to be included in an offer. It’s fundamentally limiting the benefit and value that each client gets from “their” agent.

How does TRESA fix it?

In the new legislation, TRESA, there is now an option for either brokerage representation (the old way) or designated representation, a new form of representation.

Under designated representation, the agreement remains between the client and the brokerage. One of the key differences between the two forms of representation is who is representing the client.

Under designated representation, the agreement will identify one or more agents as the designated representative for the client. The designated representative is the agent that will provide representation to the client and is responsible for promoting and protecting the best interests of the client. The brokerage and its other agents must treat the client objectively and impartially.

Another key difference relates to access to confidential client information. Under designated representation, the designated representative has a duty to protect the confidential information of the client. This means confidential information, such as the client’s motivation to buy or sell and their financial circumstances, must not be shared with anyone else inside or outside of the brokerage.

Confidential client information cannot be shared with any agent who is not a designated representative for the client.

So, now I’ll always have my own agent now?

Not necessarily! While TRESA allows for designated representation, which we feel is definitely the better model, it’s the brokerage that will decide which type of representation, either brokerage or designated, it prefers to engage in.

The choice is a business decision each brokerage will make. Most brokerages will choose one type of representation. Using both types of representation agreements increases the likelihood that multiple representation will arise. Before entering into an agreement with an agent, check with them to confirm the type of representation agreement you will be signing.

Why did this get changed?

While the specific wording and terms of the older legislation, REBBA, meant that two agents from the same brokerage were legally required to treat two clients in the same transaction under the rules of multiple representation, in practice it often wasn’t followed.

Imagine a situation where you hired an agent to sell your home and it ended up that the best offer (or only offer) came in from an agent who worked at the same brokerage as your agent. How would you feel if when you asked your agent what they thought about the offer, they said “I’m sorry, but I can no longer advise you on that and you need to decide on your own.” We imagine you’d be pretty irritated and not understand why your agent couldn’t continue to advise you and work to get you the best deal just because the other agent is also from their same brokerage.

As a result of this natural conflict between what the agents and their clients expected, plus the reality that each agent could absolutely ethnically represent their client, such technical multiple representation was often treated as if it wasn’t multiple representation. We’d argue it actually wasn’t multiple representation in practice, just technically due to the way REBBA required contracts to be signed.

Is this change a good thing?

Absolutely. We’re thrilled with this change and think it is a great improvement.

Multiple representation is a very challenging thing to do properly and while it can sometimes be the right approach, it made no sense for a seller and buyer to be forced into it just because their individual agents happened to belong to the same brokerage.

By allowing designated representation, with specific agents actually legally being the representative of the client (rather than the brokerage being the representative), multiple representation situations will occur far less often, which is good for buyers and sellers and the industry as a whole.

If you’re considering buying or selling real estate and want to work with agents who understand representation and the new legislation, don’t hesitate to get in touch with us so we can talk!

Sorry, you can’t be our customer anymore.

Jeffrey Luciano — Fri, 01 Dec 2023 21:12:28 +0000

There are a number of changes under the new legislation and we’re taking the opportunity to discuss certain changes in detail that are important to anyone looking to buy or sell real estate.

One key change is the removal of a specific term that caused lots of confusion – the Customer designation.

If you bought or sold real estate with a real estate agent in Ontario in the last twenty years, you were represented by an agent either as a Client or a Customer. That’s right, consumers were either clients or customers. Confused yet? Let’s review how it used to be, how it is now, why they made the change and whether it’s a good thing.

What’s a Client?

When you were a real estate agent’s client it meant that they would:

Promote and protect your best interests
Negotiate favourable terms for you
Maintain confidentiality
Take reasonable steps to determine and disclose material facts about the property

In the overwhelming majority of cases, when people talk about “working with an agent,” this is the kind of relationship they mean.

So, what’s a Customer?

There is a lesser relationship that used to be able to exist between an individual and a real estate agent, where the person is a Customer. When someone became the Customer of an agent, the agent has a much more restricted role, and their only obligations were:

Fairness, honesty, and integrity (ethical duty)
Exercise due care when answering questions and providing information (legal duty)
Avoid misrepresentation (legal duty)

Examples of what could and could not happen under a Customer Service relationship:

If the brokerage was representing the Seller, they must disclose anything pertinent about you (the Buyer) to the Seller (e.g., motivations and budget)
The agent was not obligated to show you all properties that you are interested in
They would not generally provide you with comparable sold data or price recommendations
They were not required to perform additional due diligence about the property – they only needed to disclose the material facts that are already known or ought to be known
The agent may not have disclosed the terms of your offer to any other buyer
The agent couldn’t lie to you

As you can tell, it was a pretty low bar. It’s being polite and providing information that must be provided and staying quiet about anything else.

If it also seems like it could be complicated to know when the agent should or shouldn’t tell you something, or what you can rely on them to do, you’re right. In our experience, most people expect a real estate agent to treat them like a client, even if they’re actually only a customer.

Here’s how it is under TRESA.

Under the new legislation, the Trust in Real Estate Services Act (TRESA), things are a lot clearer.

In any real estate transaction now, a person is either a client or a self-represented party.

A client is any buyer or seller who is receiving services under a representation agreement with a brokerage. This was true before, but now, under TRESA, that agreement must include representation in respect of the services being provided.

Unlike before, where an agent could treat someone as a customer, and kind of help them, but not fully, with TRESA in effect, you’re either fully a client or you are self-represented. This means you’re not a client, you have no agreement with a brokerage and you’re not receiving any services or representation.

If someone chooses to be self-represented, it means they have decided not to hire a brokerage for their purchase or sale and they have chosen not to benefit from the services, opinions and advice that a real estate agent can offer.

So, do I need to hire an agent to get any information or help?

Under the new legislation, real estate agents can still provide information or assistance related to a specific property to people who are self-represented.

For example, if we’re listing a property for sale and someone calls us to ask for more information or about seeing the home, we can absolutely still tell them about the property and arrange a time for them to see it.

Any real estate agent that is representing a client of their own and dealing with a self-represented buyer or seller does however have four questions they need to ask themselves to determine if they can provide assistance to the self-represented individual.

Is this assistance a service to or incidental to a service to my client and is it consistent with my client’s instructions?
Does this assistance benefit my client, and would it promote and protect their best interests?
Can I provide this assistance without sharing any opinions or advice with the self-represented party?
Can I provide this assistance without encouraging the self-represented party to rely on my knowledge, skill, or judgment?

The first two questions make it clear that if what the agent is doing for a self-represented individual helps their client, they can provide that assistance. At the same time, the last two questions makes it clear that the agent isn’t going beyond sharing information or undertaking an activity. If the self-represented individual wants the agent’s opinion or advice, they need to stop being self-represented and sign a client agreement.

Why did this get changed?

The new rules introduce clarity around relationships for sellers, buyers, and agents.

The distinction between being a customer and a client was not an obvious one for consumers, who were generally unfamiliar with the types of relationships permitted and the forms and agreements brokerages use.

Sellers and buyers entering into customer agreements did not always appreciate that clients were in a more favourable position, receiving services and representation. Customers were at risk of relying on an agent for advice when the agent was, in fact, obligated to act in the best interests of a client in the same trade.

Agents were at risk of treating customers like clients, providing opinions and advice in their attempts to be helpful, and creating implied client relationships.

Under TRESA, all buyers and sellers receiving services from a brokerage will benefit from the promotion and protection of their best interests.

Is this a good thing?

Absolutely. We’re thrilled with this change and think it is a great improvement.

In fact, we were so against Customer representation, that under REBBA, we actually refused to sign anyone up as a Customer. It wasn’t fair or helpful to those individuals, it meant a greater risk of something going wrong or problems occurring and it made us feel like we were being deceitful.

We’ve always only worked with people as Clients, or not at all, so the fact that the legislation now makes that true for all real estate agents is a fantastic step forward.

If you’re considering buying or selling real estate and want to talk about what we do for our clients, don’t hesitate to get in touch with us so we can help move you forward!

You remember 2002, right?

Jeffrey Luciano — Fri, 04 Aug 2023 12:43:11 +0000

The year 2002 was a momentous year for lots of reasons. Whether it was the launching of the Euro currency in Europe, Britney Spears and Justin Timberlake breaking up, the creation of career website LinkedIn, or George Dubya Bush’s Axis of Evil speech, lots took place during the year.

From our perspective, one of the most important things that happened was that the Ontario government passed a piece of legislation called the Real Estate and Business Brokers Act, or REBBA. This legislation spelled out the rules that real estate salespersons, brokers and brokerages must follow and since then, it has dictated how real estate transactions take place in the province.

Lots has changed since 2002 and real estate and how it is transacted has also changed considerably. In late 2020, we had Phase 1 of some reforms to REBBA (2002), where it was renamed into the arguably pithier “Trust in Real Estate Services Act (2020)”, or TRESA.

Phase 1 of the reforms to REBBA were mostly just giving agents the ability to form personal real estate corporations and changing some terminology used in the industry, so it’s fair to say that no one outside of the industry really noticed.

On August 1, 2023, it was announced that REBBA (2002) will see the implementation of Phase 2 of reforms as of December 1, 2023, and this phase of the reforms is much more substantive, particularly when it comes to the impact it will have on consumers – you know, the people actually buying or selling real estate.

If you’re interested in getting right to the source and seeing the legislative and regulatory changes coming into effect on December 1, 2023, you can find them here on the Government of Ontario website.

If you’d rather a plain language description of the big changes, then you’re in the right place. Let’s review the key things that are happening as of December 1, 2023.

Buh-bye REBBA, hello TRESA!

The Real Estate and Business Brokers Act, 2002 (REBBA) will be renamed the Trust in Real Estate Services Act, 2020 (TRESA, 2020 or the Act).

All of the paperwork that people transacting real estate in Ontario sign will have references to REBBA removed and TRESA substituted. There are lots of other changes we’ll review below, but it is important to understand that there won’t be two pieces of legislation in force, just a new, updated piece of legislation called TRESA, 2020.

Clearer Representation

As of December 1, 2023, designated representation agreements with Ontario real estate brokerages will be permitted. This means that real estate brokerages (the companies that employ real estate agents), will enter into either or both of:

Brokerage representation agreements with clients (this is the status quo and how it has been for the last twenty some years, where if you’re buying or selling through a brokerage, you’re represented in some fashion by a real estate brokerage).
Designated representation agreements with clients (this is a new option, where the brokerage would designate one or more brokers or salespersons to represent and promote the client’s best interests, to the exclusion of the brokerage and all its other brokers and salespersons).

This is being done to enhance consumer protection and in particular to make it clear when a real estate brokerage is representing multiple parties to a transaction. It may seem like not much of a difference, but to date, you actually never hired a specific real estate agent, just the real estate brokerage they worked for, and that could lead to confusion as to who represents who in a transaction.

New Code of Ethics

On December 1, 2023, there will also be a new Code of Ethics regulation put in place, that will replace the current Code of Ethics regulation. The new Code articulates registrant requirements in relation to matters such as integrity, quality of service and conflicts of interest.

This is happening due to a perceived (and in some cases, actual) bias in the activities of real estate agents. While many agents diligently followed the rule as well as spirit of the code of ethics, there were a few gray areas that caused the majority of complaints and issues that consumers had with real estate agents. The new code of ethics is designed to make sure agents act with integrity, provide a high level of service and can’t get involved in situations where there are conflicts of interest. We 100% approve of making the code of ethics more robust and improving the overall reputation and level of trust in real estate agents as a result.

Open Offer Process (If You Want!)

Starting December 1, 2023, a real estate agent will be permitted to conduct an open offer process and disclose the details of competing offers, at the seller’s direction. This will give the public more choice in the real estate trade process.

Up until now, real estate agents were prohibited by the legislation to provide information such as details of competing offers, but in practice many agents failed to follow these rules and it caused confusion and problems. As well, some buyers and sellers would prefer a more upfront negotiation approach, where all parties involved agree to share information and have an open bidding process.

There is considerable debate as to whether an open offer process results in higher or lower sale prices, is more fair or less fair (depending on whether you’re talking about the buyer getting a better deal, or the seller getting a lower sale price) and this new change will not answer that question. Despite that, it does give the parties transacting real estate the option of considering a different approach and for that reason, we’re supportive of this change to the legislation. We’ll have detailed conversations with our clients on both sides to make sure it’s the right choice, but at least it is a choice that now can be made.

Disclose it all!

Another change taking place on December 1, 2023 is the beefing up of information and disclosure obligations that real estate agents must provide to buyers, sellers and others in relation to providing real estate services.

There are some specific changes in this part, designed to help the public understand their choices for engaging or interacting with an agent, as well as the different obligations agents have under the different forms of engagement or interaction.

We’re all for plain language explanations and it is possible that these enhanced requirements will prevent unethical agents from being able to skirt the explanation of aspects of representation that they don’t want to talk about with their clients. We don’t expect it will change much in the way of how we work with buyers and sellers, as we already have very plain language conversations about what things mean. Nonetheless, clarity and precision around what is happening in the transaction is not a bad thing!

Changes to the Real Estate Council of Ontario (RECO) Powers and Tools

On December 1, 2023, the amendments in TRESA, 2020, along with the regulation changes, will help RECO operate more efficiently and focus its compliance and enforcement efforts where they are most needed and most effective.

RECO is the regulatory body that oversees real estate agents and complaints about real estate agents in Ontario. There will be new, updated rules about what will be made publicly available, RECO will gain some additional authority over administrative matters related to certain advertising, record-keeping and notice requirements, and the scope of discipline committees will be expanded.

Broadly speaking, we’re in favour of updates and revisions to how RECO approaches compliance and enforcement and we’re looking forward to seeing harsher penalties for agents who don’t follow the rules and any who violate the trust of their clients. No more embarrassing CBC Marketplace exposes about unethical real estate agents? Yes, please.

It has been a long time coming, but we’re finally going to see some changes to how real estate transactions take place in Ontario, as of December 1, 2023. While we’re sure that some changes will require more paperwork or effort on the part of agents and people buying or selling real estate in the province, if everyone involved feels a higher level of trust and comfort with what is taking place, it’s a good thing.

If you want to chat further with us about the changes, or buying or selling real estate, don’t hesitate to get in touch.