June 15, 2018 saw the Real Estate Council of British Columbia overhaul the agency rules affecting more than 20,000 real estate agents in the province.
At the core is the banning of “limited dual agency” or LDA. LDA is when the real estate agent, with the permission of both the buyer and seller (or sometimes both buyers) in a transaction, agree to let one agent(or team) act as “moderator”.
During the transaction, the LDA agreement allowed the agent to bend his or her fiduciary duty to facilitate the sale. Acting alone and technically working impartially, the agent was able to control the transaction for the benefit of the seller and the buyer. This was the theory.
BC has taken the bold step to ban LDA and it’s exciting.
I am not here to debate the good and bad of LDA. It’s gone and this is fact. It is also fact that sellers and buyers will not fully understand what this ban will mean. Many people will need to rethink the way they approach buying and selling real estate in BC. Some will be happy, some sad and some confused… at first. In time, it is expected that consumers will come to realize the benefits of the new approach.
If you would like to learn more in a hurry, call your agent up for a coffee. There is a four page form they need to share with you. 😉
If you have ever hoped your client would buy a home, you are not a fiduciary.
If you need the commission money, you are not in a good position to be a fiduciary.
If you have ever had a reasonable conversation and listened to the short and long term needs of your client, you are becoming a fiduciary.
As agents, let’s not hope. Instead, act as a fiduciary and trust that the business will come.
A big change just occurred in BC real estate with the banning of LDA, Limited Dual Agency. When seller’s asks, “do you have a buyer for my house?” The new answer is “no”. Or, it should start to become the proper answer.
All to often in BC and other markets, some real estate agents’ business practices revolve around the “list with me, I have a buyer for your property” mentality.
When I sold in Ontario 14 years ago, my agent gave me this line as a powerful incentive to sign a listing agreement that night. At the time, I was not a real estate agent. The urgency to sign the paperwork was miss placed yet we were powerless. We were scared, didn’t understand the system and the thought of the agent having a buyer waiting in the wings was all to tempting. Papers signed. Not wanting to “risk it” and feeling no need to question it, the listing presentation, contract paperwork, hugs and kisses all took about 2 hours.
Did my agent at the time give me a harmless little white lie?
There were more than 500 realtors in my area at the time. His team of 15 people technically had a slightly better than 15 in 500 chance of selling my home to one of their clients.
What we failed to focus on was the service and support the agent would offer us. How would he or she “stick up” for our price? What was their negotiation style? Who would be helping us with the actual sale (we never met the listing agent a second time and we got handed off to a junior, inexperienced “salesy” guy)? This poor experience motivated me to become and agent and write this blog. It’s been 14 years.
Many will decry the loss of LDA. Me, not at all. Sure, LDA can work at times. However, if you want your agent 100% in your corner, it’s best that the answer to the question be “no”, I don’t have a buyer. But, I will help you get the best price and terms from the best one that comes around…
One tenet of agency is to provide “undivided” loyalty. It’s an important step in becoming a true fiduciary.
Limited Dual Agency(LDA) in real estate is when one agent acts for two parties in a transaction. LDA will officially be banned in March 2018. The most common iteration is when the listing agents brings a buyer for the seller (or offers to act on behalf of a buyer who calls the listing agent directly). Interestingly, many sellers hire their listing agent in the hopes they have a buyer for their property. To me, this is like asking the prosecution lawyer to also act for the defence in a court case.
At the same time, this practice has been going on for years and many point to the great success this has provided clients both buyers and sellers.
The idea that the seller’s agent is tasked with selling the client’s property quickly, for top dollar and for terms benefiting the seller while keeping their personal story private seems at odds with suddenly being able to switch a gear and become “impartial” to the transaction by evoking LDA.
What about the buyer’s desire for the best price and terms and impartial due diligence? With a “double end” commission on the line and a fast flow of communication, agents who specialize on this transaction can be greatly rewarded but are they not somehow to close to the “deal”? The superintendent thinks they are.
It’s exciting to see how my profession will grow with this important change.