Gerald Tostowaryk, Author at REM https://realestatemagazine.ca/author/geraldtostowaryk/ Canada’s premier magazine for real estate professionals. Wed, 20 Mar 2024 15:25:50 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://realestatemagazine.ca/wp-content/uploads/2022/09/cropped-REM-Fav-32x32.png Gerald Tostowaryk, Author at REM https://realestatemagazine.ca/author/geraldtostowaryk/ 32 32 Letter to the Editor: Tax dollars for climate change mitigation vs. more affordable housing — which is best? https://realestatemagazine.ca/letter-to-the-editor-is-investing-in-climate-change-mitigation-really-the-best-use-of-our-tax-dollars/ https://realestatemagazine.ca/letter-to-the-editor-is-investing-in-climate-change-mitigation-really-the-best-use-of-our-tax-dollars/#comments Wed, 20 Mar 2024 04:03:24 +0000 https://realestatemagazine.ca/?p=29543 “It takes money away from somewhere else, and I believe somewhere else — making housing more affordable — is a better use of our tax dollars”

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On February 22, REM published a well-researched and well-argued article about the public outcry against ever-increasing property taxes.

One small, innocuous phrase that says so much caught my attention: The Montreal mayor was quoted as stating we are facing “unprecedented challenges” around inflation, housing and climate change.

While most of the problems around inflation and housing were actually caused by governments, I want to challenge the assertion that we’re facing an unprecedented challenge around climate change.

 

Is climate mitigation investment worth taking money from more affordable housing?

 

Spending our tax dollars on climate mitigation is very expensive and causes more tax increases, but this will have (and is already having) a more significant effect on our economies.

Is the investment in climate mitigation worth the huge amounts of our tax dollars, especially given that there are no win-win solutions?

 

There is no climate emergency: Making housing more affordable is a better use of our tax dollars

 

It takes money away from somewhere else, and I believe somewhere else — making housing more affordable — is a better use of our tax dollars.

I decided a year and a half ago that climate was important enough to study in-depth. I can’t go into detail in a letter of this length, but I can say that all my claims are easily verifiable. Climate is a very complex system and I can only scratch the surface.

There is no argument against CO2 rising rapidly (currently about 400 ppm). But, there is no climate emergency, there is no scientific consensus and there are no climate “deniers.”

 

Let’s start with CO2

 

CO2 has indeed risen quite rapidly in the last 150 years and industrialization is very likely contributing to it, but it is NOT the cause. The earth’s climate changes naturally over several cycles as long as 120,000 years due to variations in the planet’s orbit and spends many years in cooler periods (ice ages) and then shorter periods in warmer interglacials. We happen to be in a peak interglacial right now (yay).

What happens during these peaks? CO2 and temperature rise rapidly, which have been much higher than now (about as high as 1,000 ppm) and likely will be again. One day, though, Canada will be under a mile of ice again and there is nothing anyone can do about it. 

 

Between new technologies and population decline, CO2 will come down

 

The Intergovernmental Panel on Climate Change (IPCC), of the United Nations, came up with several scenarios to determine what will happen under various CO2 emission models. They recently dismissed their worst-case scenario (the one all the end-of-the-world predictions are based on) as highly unlikely, and I believe they’re considering removing the second worst-case scenario, too.

It turns out Western nations’ carbon emissions have been declining for a couple of decades. Nations like China and India are major contributors, firing up new coal-powered plants every week. The IPCC’s worst-case scenario for sea level rise is 18 inches by 2100. Plus, the world’s population is predicted to peak within 50 years and then decline. Between new technologies and population decline, CO2 will come down.

 

Consensus: Foreign to science

 

It also turns out there is no scientific consensus. Consensus is not even a concept in the world of science.

“No amount of experimentation can ever prove me right; a single experiment can prove me wrong.”

 

– Albert Einstein

The whole purpose of science is to question assertions, and consensus is foreign to the endeavour. The 97 per cent consensus position was first put forward by John Cook, from the Global Change Institute at the University of Queensland, who reviewed hundreds of papers, and it has been vigorously challenged. Another scientist reviewed the same papers and found something like a 5 per cent consensus. 

 

Yes, CO2 is increasing — but it’s about the level of concern

 

Last year, the CLINTEL (Climate Intelligence) research foundation produced a climate declaration challenging the “consensus” and so far over 1,900 scientists and professionals have signed on, including a Nobel Prize winner.

This brings us to the “deniers”, an embarrassing argument for any scientist to make. This is called arguing against the person and is widely recognized as no argument.

No serious scientists deny increasing CO2, but many question the level of concern.

Remember the argument that increasing CO2 will make the world more arid and threaten food production? CO2 is plant food and, drum roll please, an area one to two times the size of the U.S. has greened and food production has increased dramatically.

 

Investing climate money in housing affordability will dramatically improve the lives of ordinary Canadians

 

So, with all these factors to consider, is climate change a wise use of our property (or other) tax dollars? I say no, certainly not yet. Bjorn Lomborg eloquently laid out the details of climate and the consequences of mitigation. The more we spend on climate, the less we can spend on roads, bridges, schools, medicine and housing.

Canada contributes 1.5 per cent of the world’s greenhouse gas emissions. Our efforts will have zero impact on climate but will result (and already are) in economic disaster. Investing that money in housing affordability instead will dramatically improve the lives of ordinary Canadians. On top of this, research finds that the better off people are economically, the more they are amenable to saving the planet.*

 

*For example, a UN survey found poorer nations ranked climate their last priority, with things like better healthcare and better job opportunities coming higher. A 2030 version of this survey is currently underway.

 

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]]> https://realestatemagazine.ca/letter-to-the-editor-is-investing-in-climate-change-mitigation-really-the-best-use-of-our-tax-dollars/feed/ 1 Ethical Dilemmas: Challenging the notion of competition law – is it wrong to argue for a middle ground? https://realestatemagazine.ca/challenging-the-notion-of-competition-law-is-it-wrong-to-argue-for-a-middle-ground/ https://realestatemagazine.ca/challenging-the-notion-of-competition-law-is-it-wrong-to-argue-for-a-middle-ground/#comments Thu, 29 Feb 2024 05:03:06 +0000 https://realestatemagazine.ca/?p=29015 It’s correct that our system is collaborative — we collaborate to help clients, but the collaboration stops there. Is it time to reevaluate?

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Once again, anti-competitive accusations are being leveled against our industry, this time in the McFall case. I remember back in the early 1990s when the first discount broker of substance came to our market. We were all upset, I still think rightfully so, and there was much talk about not showing their listings or offering them the same fees they offered us.

This was really our first foray into competition law, and we really weren’t well prepared for it. One large brokerage decided to offer the discounter what they offered us — that didn’t go so well.

 

The question of what is right is complicated

 

This was a prime example of the complexity of the world of laws and ethics. Sometimes laws conflict and sometimes both laws and ethics conflict. The law is very complex and even lawyers don’t know where cases will end up, but when we add in ethics the water becomes very muddy.

Let’s say, for example, you and I are the only two barbers in town. I cut your hair for $20 and you cut mine for $30. Fine, I start charging you $30 even though I charge all my other customers $20. Arguably, I am ethically right but legally wrong. Now, of course, this is oversimplified, but hopefully, my point that the question of what’s right is complicated is clear.

 

MLS systems: Serving two masters, something courts have trouble with

 

Let’s roll this back into real estate. I argue the MLS is the best system ever created, and better by a country mile. It allows buyers access to the greatest number of homes, it allows sellers access to the greatest number of buyers and it allows agents to better serve their clients’ needs. But, just as important, it allows both parties to have their own agent working for their best interests.

The argument against the MLS is that a cooperative system is also collaborative and it breaks competition law. It is, arguably, a system where a consumer (or an agent) is being asked to serve two masters, and courts have a very difficult time with the concept of serving two masters.

Before going any further, let me state that nothing exists in a vacuum, and it’s my firm belief that it’s time the concept of competition is knocked off the pedestal we have placed it. Let me explain.

 

The problem is not lack of competition but a perceived lack of competition

 

I think it’s safe to say that anyone who has spent any time as a realtor knows that our industry is one of the most competitive to be found anywhere on this planet and that no organized price fixing exists. The argument that our system is collaborative is correct in that we collaborate to help clients but the collaboration stops there.

The industry’s barrier to entry is quite low and many people leave in their first two or three years. The problem is not lack of competition. The problem is a perceived lack of competition (or maybe, an ability to claim a lack of competition) and that competition law is on this pedestal, a shining light for all to see, never to be questioned or subjected to scrutiny. It’s the manifestation of pure goodness on earth. And it’s time this assertion is challenged.

 

Let’s get competition law off its pedestal

 

Let me start by saying I do believe competition is a critical component of a market economy and should indeed be given a priority ranking; my issue is that it’s given an almost divine ranking, placed so far above any mitigating factors that it can become destructive. 

Cooperation can be a strong mitigating factor deserving of consideration. As mentioned, our cooperative system benefits everyone — I think that’s unquestionable. I do not believe it’s unethical to argue that if you want the benefits of the system, you must also pay the cost.

 

Arguing for a middle ground

 

The problem arises in how we set that cost. An industry-wide agreed-upon buyer’s agent fee is clearly anti-competitive and very few would argue that. I think just as few people would argue that to ask someone to work for weeks or months for $1 is also wrong, and in many cases where this argument is being made, it’s hypocritical.

Is it wrong to argue for a middle ground? Is it wrong to say “You have to pay something?” Even more defensible, is it wrong that something is anything more than zero?

I think that’s an easy argument to make ethically but clearly, it isn’t so easy legally. Maybe the law is wrong? Maybe it’s time the courts realize that the benefits of a cooperative system in which everyone is better off is worth some cost?

 

Nothing exists in a vacuum and that includes competition. I predict that if we continue down this anti-competitive allegations road, we will soon throw the baby out with the bath water.

 

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]]> https://realestatemagazine.ca/challenging-the-notion-of-competition-law-is-it-wrong-to-argue-for-a-middle-ground/feed/ 8 Ethical Dilemmas: Mandatory ORWP – an exercise of responsibility or power? Do benefits outweigh rights? https://realestatemagazine.ca/ethical-dilemmas-mandatory-orwp-an-exercise-of-responsibility-or-power-do-benefits-outweigh-rights/ https://realestatemagazine.ca/ethical-dilemmas-mandatory-orwp-an-exercise-of-responsibility-or-power-do-benefits-outweigh-rights/#comments Thu, 23 Nov 2023 05:03:59 +0000 https://realestatemagazine.ca/?p=25840 A good ethical decision is not what we have a right to do, but what the right thing to do is

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Like many of us in Canadian real estate, I have been watching the conversation around the Ontario Realtor Wellness Program (ORWP) in REM. By now, we are all aware of the recent court case challenging the ORWP. The plaintiffs are alleging human rights violations including, among others, age discrimination for those who have to pay the same as everyone else but receive lower benefits, and inferior coverage for those who have spousal or other benefits.

To date, leadership at OREA has held firm on the mandatory nature of the plan. So, today, I would like to reflect on the arguments being made on both sides from the standpoint of ethics.

 

Mixed sentiments

 

In a previous REM article, many claims were made in the comments section including such arguments as the detractors are “a fringe minority”, “they [OREA] are just lining their pockets”, and my personal favorite, “it was a democratic process so if you don’t like it, leave”. There was also an open letter to the editor extolling the virtues of the program. 

I would like to address the letter and the comments before making my main argument as to the correctness of the decision. The letter writer made some very good points about how the program benefitted her, and having been a realtor most of my life, I certainly empathize. That said, the fact that something is good for me is not an argument to make it mandatory for someone else.

 

“The will of the majority, with respect for the rights of the minority”

 

Regarding the comments made, I would like to deal with the last one first. “It was a democratic process so if you don’t like it, leave” is perhaps the most undemocratic statement I’ve heard in a long time. How often do we hear democracy described as “the will of the majority”? For some inexplicable reason (inexplicable because I hated social studies), I have always remembered the words of my high school social studies teacher, Miss Mondea: “Democracy is the will of the majority, with respect for the rights of the minority.”

Backing up her statement, in Democracy in America, one of the most influential books of all time on government, Alexis de Tocqueville warned us about the tyranny of the majority. I am not claiming that anyone is acting as a tyrant, but I am simply saying that when we are in the majority, ethics demands that we respect the rights of the minority – one day, we will have our turn in the minority.

Now, the first two arguments are called ad hominem arguments, or arguments against the person. These are essentially non-arguments. The detractors may or may not be a fringe minority and OREA may or may not be lining its pockets, but even if both were true (which they are almost certainly not) they have no bearing on whether or not the policy is good.

Only the relative merits or demerits of any position are what matters. Only arguments that speak to the issue are valid. And, on that note, I would like to address the policy strictly on its apparent merits and demerits.

 

Leadership is responsibility

 

I must first address the issue of management responsibility. Here, I’m reminded of when Robert Joss became dean of the Stanford Graduate School of Business, he received an organizational chart showing him, the dean, at the bottom below staff, faculty and students. The message was clear: being the leader isn’t about power – it’s about responsibility and you are responsible to all of these people.

Perhaps the greatest management guru to have ever lived, Peter Drucker, said it best: “Leadership is responsibility.” FULL STOP.

 

The big question

 

Here’s the question, then: is making the OREA benefits package mandatory for all members an appropriate exercise of responsibility or an exercise of power? 

If the evidence shows it to be a wise exercise of responsibility, then it is justifiable. But, if it proves to be an exercise of power, it’s questionable. So, let’s examine the pros and cons of the mandatory policy.

 

Arguments for and against

 

From all I’ve read, the only argument for making the policy mandatory is it will lower costs for all members.

On the flip side, the arguments against a mandatory plan are that some members

  • Already have their own plan which they prefer,
  • Have spouses with their own plans,
  • Have plans that are apparently superior to the OREA plan, or
  • Just don’t want the plan.

We need to ask if the difference in cost for the members who want the plan outweighs the rights of those who don’t.

 

And this is where I am going to leave the discussion to you, as I do not know the answer.

It’s up to you, all 96,000 members, managers and directors of OREA to look at both sides of the issue. What is best for all members of OREA? What is the best policy for everyone? A good ethical decision is not what we have a right to do, it is what is the right thing to do.

 

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]]> https://realestatemagazine.ca/ethical-dilemmas-mandatory-orwp-an-exercise-of-responsibility-or-power-do-benefits-outweigh-rights/feed/ 26 Ethical Dilemmas: Right or wrong track? Here’s how to tell https://realestatemagazine.ca/ethical-dilemmas-right-or-wrong-track-heres-how-to-tell/ https://realestatemagazine.ca/ethical-dilemmas-right-or-wrong-track-heres-how-to-tell/#comments Thu, 19 Oct 2023 04:02:31 +0000 https://realestatemagazine.ca/?p=24935 Our friends aren’t liable for erroneous advice we might use but our brokers and regulatory bodies are – when in doubt, ask

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It is said that the road to hell is paved with good intentions. As an ethics instructor, I’ve met a lot of people over the years who had the best of intentions but were somehow barrelling down the wrong road.

Have you ever found yourself in a situation with a client or another practitioner where you were contemplating a course of action that you were conflicted on, a course of action where you had to choose your road to travel down, and so you made a call or two to people you know for their thoughts?

Having been an industry instructor for many years and specifically being an ethics instructor, I often have members approaching me to ask my thoughts on a questionable course of action they are considering.

Sometimes we are clearly on the wrong track and sometimes we are on the right track, and there are telltale signs of each.

 

The wrong track

 

Much of the time, it quickly becomes evident that they are really just hoping for my blessing or even a simple word of encouragement that they are on the right track, that their considered course of action is perfectly acceptable, or at least that they are justified in considering it.

There’s generally only one problem: it usually isn’t and they usually aren’t.

The first thing we often do in these situations is ask a few friends for their opinion on the matter. And the first clue that we are heading down the wrong road is when our friends question our course of action. So, we seek the advice of other friends.

When that doesn’t work, we advance to the second level: calling someone we know in the industry who has more experience or knowledge of such areas. This is where I often get a call, and, invariably, this is where the third level of warning signs emerge.

When I do get calls on this, instead of asking my opinion, the other person usually tells me the situation from the perspective of “Here’s why I’m justified in doing this course of action”, clearly looking for me to nod appreciatively and agree.

Other times, they will try to gently lead me in the direction they are looking to have justified. Unfortunately, I am often unable to do so and have to offer a word of caution. This is usually where I offer my friend the proper course of action for assistance – and where the conversation can quickly fade away.

 

The right track

 

No matter how much we feel justified in taking a questionable course of action, the very fact that it is questionable should be our warning to seek proper assistance. So, this begs the question, what is proper assistance? What is the proper course of action?

Check with your broker, and/or check with your regulatory body. Our friends aren’t liable for any erroneous advice they give us and that we use – we are. Additionally, our friends may be biased in our favour or may not want to get into a disagreement with us, especially if they detect we are looking for a specific answer.

Our brokers are liable for erroneous advice they give us, so it is more likely to be better advice. They know these situations and they know how to avoid trouble.

Our regulatory bodies also know situations and they clearly know the legislation. Any advice they provide is likely to be good advice. Just remember that some regulatory bodies may not give advice other than “See rule number…” or “Check with your broker”.

There is only one problem with the advice our brokers and our regulatory bodies give us: it may not be the answer we were hoping for. For this reason, when I advise people to check with their broker or their regulatory body, this is where the conversation often fades away.

But it is the answer we will eventually come to realize was the right one all along. The words from Robert Frost’s poem, The Road Not Taken, come to mind here:

 

Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

 

Which road will you take?

 

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]]> https://realestatemagazine.ca/ethical-dilemmas-right-or-wrong-track-heres-how-to-tell/feed/ 1 Ethical Dilemmas: How many homes to show a buyer? https://realestatemagazine.ca/ethical-dilemmas-how-many-homes-to-show-a-buyer/ https://realestatemagazine.ca/ethical-dilemmas-how-many-homes-to-show-a-buyer/#comments Mon, 24 Jul 2023 04:02:48 +0000 https://realestatemagazine.ca/?p=23177 Buyers rely on realtors to guide them in finding the perfect home, aligning their needs and wants with the market; sometimes, that can be challenging

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]]> I recall a number of years ago hearing of a real estate training session by a well-known real estate trainer wherein he advocated showing buyers four homes and then asking which one they wished to buy. If they wanted to see more homes, his training was to let them go as clients and move on to the next buyer.

I also recall speaking with an agent around the same time who proudly proclaimed how he would turn to them (in those days, buyers would generally ride with us in the back seat, now we’re in the back seat) and ask them which one they wanted. If they wanted to see more homes, you guessed it, just like the George Thorogood song, “Next Friday come, and I didn’t get the rent, out the door I went.”

 

Until the trust relationship is solidly established, buyers aren’t going to listen

 

Now I can see the logic behind this technique. Back then, we would generally choose which homes to show, and if we did our job well, we would choose the four best homes based on the client’s needs. Buying one of these four would get the clients into the best home as soon as possible and make us the most amount of money in the least amount of time.

Ethically speaking, though, this logic never sat well with me and still doesn’t. The reasons will be obvious to many of us, but before I discuss that, I would like to add one more complicating factor.

The real estate world is very different now than it was ten or twenty years ago, and now the clients often pick many or most of the homes they want to see, then turn to us and ask how soon they can see them. If we don’t want to show, often out the door, we go. Even though we know they aren’t likely to buy many or most of the homes they want to see, until the trust relationship is solidly established, they aren’t going to listen, and they will go with whoever will show them those homes. This often adds unnecessary work for us and can frustrate buyers when they realize many properties aren’t quite as advertised.

 

Are buyers really liars?

 

So back to my original point. The four-homes showing limit never sat well with me. Sure, oftentimes, the buyers would return to one of the original four homes because we did our job well and picked the best ones — but not always.

Enter the old adage, “Buyers are liars.” I’ve never liked that saying because why would someone lie about what they want? How would it serve their best interests to see the wrong properties? 

I feel a more accurate statement is, “Buyers don’t realize they don’t really know what they want, or are mixing up their wants and needs, or don’t quite trust the agent enough to openly reveal their true needs and wants yet.”

I know, I know, it doesn’t quite have the same ring as buyers are liars, but I feel it is a more accurate statement. Either way, it is a complicating factor in the realtor/client relationship and the successful completion of a purchase. 

 

Distinguishing between needs and wants 

 

Often, buyers need to receive some good advice from their realtor before they can appropriately make the distinction between needs and wants and before they can trust the agent enough to accept what they will get for a certain price. And they aren’t ready to accept advice from us until they trust us — and it may take a few showings and a little discussion time together to build that trust.

And finally, sometimes the best four homes available just aren’t good enough. Sometimes you have to wait until the right home comes on the market, and that can be a money pit. So, to bring the discussion full circle, often, the right thing to do ethically isn’t the right thing to do to maximize short-term income. 

Clients depend on us to help them fall in love with the right home, and most of the time, we are successful in aligning their needs and wants with the market once they trust us, but sometimes that can be challenging. 

I don’t have any special techniques; for me, I’ve just found that providing them with good market information and showing them a few of their picks generally works to align needs and wants with the realities of the market. 

I would love to hear everyone’s ideas and techniques for maximizing both client satisfaction and income. 

 

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]]> https://realestatemagazine.ca/ethical-dilemmas-how-many-homes-to-show-a-buyer/feed/ 3 Ethical Dilemmas: Analyzing the Realtor Cooperation Policy https://realestatemagazine.ca/ethical-dilemmas-analyzing-the-realtor-cooperation-policy/ https://realestatemagazine.ca/ethical-dilemmas-analyzing-the-realtor-cooperation-policy/#comments Wed, 03 May 2023 04:04:17 +0000 https://realestatemagazine.ca/?p=21907 OPINION: Should the industry protect its own interests or prioritize the clients'? Gerald Tostowaryk delves into the ethical considerations surrounding the Realtor Cooperation Policy

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]]> So, the Canadian Real Estate Association will implement the Realtor Cooperation Policy amid seemingly significant disagreement from many in the industry. 

With so much discord around this policy, this is often a clue that we are near the point where the many different interests converge. So, from an ethical standpoint, who are the parties, what are the interests at play, which ones should supersede the others, and why?

In short, who is right, who is wrong and how right and how wrong are they?

NOTE: I have purposely kept my personal opinions out of the discussion (other than a brief comment at the very end) as I am attempting to analyze this from a strictly ethical perspective.

“I see three interested parties: organized real estate, individual real estate agents, and consumers.”

 

The question at hand is how to limit the “coming soon” marketing of listings soon to be on the MLS. Even though I am analyzing this from an ethical perspective, legal duties are so intertwined I don’t see how I can do this without including them fully.

I see three interested parties: organized real estate, individual real estate agents, and consumers, although organized real estate could be further broken down into its local, regional, and national organizations.

So with these interested parties, what are the interests at play?

With organized real estate, their interests seem to be the furtherance of professionalism, putting clients’ interests first (collectively) and protecting the integrity of the MLS system.

With us individual practitioners, I see a couple of diverging interests, protection of clients’ best interests versus our right to choose our own business models.

With clients, I see one major interest—the right to choose how they market their properties. 

I think it is safe to say that all the above interests are valid. The big question is which one (or ones) should be the overriding interest(s), why, and where the rest fit in. Before I do that, there is another issue at play, at which level (local, regional, or national) does the authority to make this decision lie (if indeed it even exists)? From what I can see, this is more of a legislative or procedural issue and less of an ethical issue, so I won’t (and am likely not qualified to) address this issue.

I would say the highest-ranking interest of all the above is the clients’ right to market their properties how they see fit. I say this because of established agency law, competition law, our various provincial and territorial rules and, finally, our Code of Ethics. They all point to the primacy of the client and of our duties thereunder.

If my assumption is correct, the next question is how do the remaining interests rank and, where they conflict, which should rule? Again, for the same reasons, it seems to me that the next highest interest is our right as practitioners to choose our individual business models, followed by the protection of our individual clients’ best interests under our chosen business model. 

 

“I am not sure we have any valid claim to decide what business model is best for consumers as a whole, nor do I feel we are the best body to be making this decision ethically.”

 

The professionalism of the industry and the integrity of the MLS system strike me as the bottom-ranking interests in this hierarchy (and I think it is arguable that existing codes of ethics are sufficient to protect the industry’s professionalism and integrity. Note I am not saying that they always work adequately; I am simply saying they provide the required standards (adequate compliance and enforcement is a whole different kettle of fish).

The one interest I see as problematic is us as an industry protecting clients’ interests collectively; I am not sure we have any valid claim to decide what business model is best for consumers as a whole, nor do I feel we are the best body to be making this decision ethically.

I also question where it is written that an exclusive listing means “a listing whereby the listing agent can only market one-on-one to individual prospects.” What if a fully informed consumer chooses of their own free will to market their property to the marketplace publicly through one agent only? Where does this fit in? Where do we acquire the authority to declare this as an invalid way to market exclusive listings? Many countries operate solely on this model.

Now I admit I do not know how agents have been marketing “coming soon,” but assuming they are not doing it through MLS, I must also question where we as an industry acquire the ability to limit the practice if a fully informed client has chosen to allow their agent to do this. 

Yes, they may possibly receive less than on the open market, but if they choose this option of their own free will, where do we gain the authority to deny this?

 

“I just don’t see our interest in protecting the MLS system as equal to consumers’ rights to choose how to market their properties legally or ethically.”

 

Now if the client has not been fully informed, then clearly, this is a serious issue, but we already have rules and a code of ethics to deal with this. Would it not be enough to create a simple “fully informed” form outlining all the potential costs for the client to initial each item and sign (and perhaps the broker sign as well) before a listing can be marketed as “coming soon?” Or maybe just create a time limit for marketing upcoming MLS listings as “coming soon,” leaving exclusive listings out of the equation?

I clearly see the danger this poses to organized real estate (and our cooperative system in Canada is, in my opinion, a huge benefit to consumers), but it seems to me our interest here is subservient to the client’s right to choose how they market their properties. I am struggling to see how this will survive the first legal challenge. I just don’t see our interest in protecting the MLS system as equal to consumers’ rights to choose how to market their properties legally or ethically.

 

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]]> https://realestatemagazine.ca/ethical-dilemmas-analyzing-the-realtor-cooperation-policy/feed/ 19 Ethical Dilemmas: The debate over expired listings https://realestatemagazine.ca/ethical-dilemmas-the-debate-over-expired-listings/ https://realestatemagazine.ca/ethical-dilemmas-the-debate-over-expired-listings/#comments Fri, 17 Mar 2023 04:03:09 +0000 https://realestatemagazine.ca/?p=21161 Opinion: How do we balance the privacy of sellers and the need for agents to earn a living?

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]]> I had a conversation with a small-town broker last month where we discussed the ongoing concern regarding privacy legislation and real estate agents contacting expired listings with information gained through MLS.

In a nutshell, per my discussion with the Real Estate Council of Alberta (RECA), privacy legislation says that information can only be used for the purpose it was provided. 

Since sellers do not provide their information for other agents to contact them to list, it cannot be used for such purposes (please note the appropriate level of government in your province is the final authority). 

 

“This is a good example of the complexity of ethical dilemmas we often face in our day-to-day…”

 

Still, some agents are prepared to take the risk to contact these sellers with some success and often no or little repercussions.

Full disclosure: I am not completely a fan of privacy legislation extending to not contacting previous unsuccessful sellers, at least not a blanket ban. I understand the reasoning, though I feel it is overreach; more on that later.

This is a good example of the complexity of ethical dilemmas we often face in our day-to-day in this industry. To truly understand, we must ask who is affected, and we must apply moral reasoning.

In asking who is affected, we could say it directly affects both the consumer who values their privacy and the consumer who wants every opportunity to market their property and agents looking to pursue their businesses.

 

“…some consumers do not wish to be contacted by every agent in town, and we must respect that.”

 

To arrive at the right thing to do, moral reasoning requires that, in addition to analyzing how it affects us (which comes naturally), we must also look at how it affects others. 

There are likely many clients who would like other agents to contact them as it would provide them with more options to choose from. 

This works in our favour, so of course, we would support these people, but some consumers do not wish to be contacted by every agent in town, and we must respect that.

Finally, we as agents have a right to expect every ethical and legal opportunity to serve our marketplaces and, by doing so, earn a living. 

 

“Whether we choose to see it or not, these kinds of questionable decisions affect us personally, the reputation of our industry and society as a whole.”

 

What to do?

Well, we could certainly do as some do and contact expired listings anyway, knowing that the risk-reward scenario may be in our favour. 

But by doing so, we are disrespecting the rules and regulations, the rights of others who do not wish to be contacted, and the greater society by saying laws and ethics don’t apply to us. 

As we hear so often these days, “XYZ company is committed to [insert appropriate right here], but [insert excuse here].” In other words, lip service; the company respects everyone’s right to whatever, as long as it doesn’t affect them. 

Whether we choose to see it or not, these kinds of questionable decisions affect us personally, the reputation of our industry and society as a whole. 

 

“In a world of ever-increasing invasions of our privacy, there must be a middle ground between privacy and doing business ethically and legally.”

 

Are there other ways to legally and ethically contact expired listings? There certainly are. 

One method I have considered for some time, and RECA confirmed it would probably be seen favourably, is establishing a routine whereby we regularly drive a particular neighbourhood looking for signs coming up and coming down. 

Nobody can say for sure until it is legally tested, but it is highly likely to be seen as an acceptable way to gather information on potential expired listings. 

Coming full circle to my earlier comments about not fully being a fan of this aspect of privacy legislation, why not implement a checkbox on the listing document for sellers to determine if they wish other agents to be able to contact them after expiry?

In a world of ever-increasing invasions of our privacy, there must be a middle ground between privacy and doing business ethically and legally. 

Maybe you have some different ideas? What does your regulator allow? 

 

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]]> https://realestatemagazine.ca/ethical-dilemmas-the-debate-over-expired-listings/feed/ 7 Opinion: The real truth about ethics in real estate https://realestatemagazine.ca/opinion-the-real-truth-about-ethics-in-real-estate/ https://realestatemagazine.ca/opinion-the-real-truth-about-ethics-in-real-estate/#comments Tue, 07 Feb 2023 05:02:29 +0000 https://realestatemagazine.ca/?p=20623 "I contend that, by and large, realtors are highly ethical professionals and that our codes of ethics do make a difference."

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]]> I recently read a great article about why real estate agents breach their code of ethics. It appears in an American publication but is directly relevant to us in Canada.

So, why would a realtor breach their code of ethics? The author speculated about the causes and broke them down into two possibilities: ignorance of our code of ethics and insufficient enforcement. 

I was largely in agreement with his views on these possible causes, but before I address them, I want to disagree with the major premise.

 

Ethical standards

 

The main premise was that, despite our codes of ethics, the public perception is there that we are not to be trusted and that even within our ranks, complaints about the lack of adherence to ethical standards are common. 

The author did not state it directly but very directly implied there is a problem. I disagree with this premise, as perception is not always reality.

Thank you to the Real Estate Council of Alberta for providing me with the last year’s sanction statistics. A few cases remain open, but in all likelihood, the number of hearing outcomes totalled nine individuals between Oct. 1, 2021, and Sept. 30, 2022 (there were 33 administrative penalties and 43 letters of reprimand). 

In 2022, the Realtors Association of Edmonton recorded some 24,000 transactions, while nearly 30,000 transactions were recorded in Calgary. 

I contend that, by and large, realtors are highly ethical professionals and that our codes of ethics do make a difference. For the few bad apples that make their way in, we all have a duty to report them and to let our regulatory system weed the garden.

 

Enforcement and punishment 

 

Okay, so back to the arguments about why real estate agents breach their code of ethics. The author dismissed the ignorance argument for most cases, and I agree with him. 

But then he also dismissed the enforcement argument because enforcement is too cumbersome for the plaintiff and is not intended to punish. Rather, enforcement is to demonstrate that ethics are to be taken seriously and internalized, a sort of positive reinforcement.

I disagree with the first point and agree with the second.

I disagree that enforcement is not to punish, and I believe punishment needs to be one aspect of the consequences for an ethics breach. I researched deterrence with respect to crime, though it should apply directly to ethics violations as both involve breaking the rules and subsequent consequences.

 

The Economic Theory of Crime

 

Some researchers argue that punishment does not deter crime, but many argue it does, with the Economic Theory of Crime being a major theory.

The Economic Theory of Crime is basically an application of the theory of demand. In 1968, Nobel Laureate Gary Becker formalized the theory, which states that potential criminals are economically rational and respond significantly to the deterring incentives of the criminal justice system. 

In a nutshell, in choosing to commit a crime, they weigh the costs and benefits. The probability and severity of punishment negatively affect crime rates, therefore reducing them. 

For all but the irrational criminals, this makes complete sense to me, and some of the studies I found claimed that there is substantial empirical evidence to support this.

 

Internalize good ethics

 

My experience as an instructor for an industry ethics course bears this out. Reassuringly, most attendees in the course who are there because they have to be and not because they want to be, seem to understand they broke the rules and accept their consequences in a rather cheerful manner.

Still, there are always some who clearly demonstrate their discomfort with this part of their sanctions. This tells me deterrence has an effect. 

But I agree that punishment should also have a positive component aimed at getting attendees to internalize good ethics. I try my best when instructing ethics to treat all attendees with respect and to demonstrate the joys of internalizing and exemplifying good ethics in our careers. 

At the end of most classes, one or two attendees will pay me the greatest compliment, expressing their new outlook and newfound joy in internalizing good ethics in their practices. 

This makes it all worthwhile.

I have met many great realtors in my years both as a realtor and as an instructor, and I contend the public is in good hands.

 

The article referenced in Gerald’s writing originally appeared in Realty Times on Jan. 15, 2023. 

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]]> https://realestatemagazine.ca/opinion-the-real-truth-about-ethics-in-real-estate/feed/ 3 Disclosure dilemmas: Balancing legal and moral obligations https://realestatemagazine.ca/disclosure-dilemmas-balancing-legal-and-moral-obligations/ https://realestatemagazine.ca/disclosure-dilemmas-balancing-legal-and-moral-obligations/#comments Mon, 19 Dec 2022 05:01:18 +0000 https://realestatemagazine.ca/?p=19863 An anonymous caller makes allegations of a serious problem with the septic tank at one of your listings. How would you respond?

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]]> Very early in my career, I listed an acreage property, the home of an acquaintance of mine and his family. Sure enough, one day I got that fateful anonymous phone call in which the caller informed me that the seller had problems with their septic system freezing up in the cold Alberta winters. This was before caller ID and before property inspections became common.

Another time, about fifteen years ago, I had a home for sale in Edmonton, and we experienced one of those one-in-a-hundred-year rainfall events that caused basement flooding in many area homes. In their home, a small puddle of water appeared in one corner of the basement.

 

Legal and ethical obligations

 

We all experience our share of these fun scenarios, and the tough question is always, what is the right thing to do ethically? Our legal obligations are clearer (though not always) than our ethical obligations. 

The Real Estate Institute of Canada, in its superb ethics course REIC 2600, defines ethics as “the difference between what we have a right to do (legal) and the right thing to do (ethics).”

Knowing this, what do we do? What would you do? What did I do?

The answers are both easy and difficult. Many years have passed, and my memory is fading, but let me deal with the first scenario. 

 

Scenario #1

 

The easy answer is that we cannot withhold any information that could affect a sale. I had to discuss this situation with my client, and depending upon the instructions I received, I would have to decide if I could continue to represent them. 

I have to tell you, as a young agent hungry for income, I badly wanted this to go away. 

They expressed complete surprise at the allegation and were adamant they did not have any such problem. They had horses, so the several bales of straw in their backyard did not raise any doubts in my mind though I was wondering why they had arranged it as they did (more on this later). 

My broker pointed out that this was an anonymous caller, and how did I know it wasn’t someone with an axe to grind? If that were the case, disclosing this to a buyer would have serious negative repercussions for my sellers. On the other hand, if it were true, not disclosing it would have serious repercussions for buyers.

In the end, I decided an anonymous phone call was not enough evidence to make a conclusion, I certainly was not an expert, and I had no reason not to believe my client. 

An added factor I wasn’t aware of at the time is that it was likely a buyer-beware issue because, to a knowledgeable person, the arrangement of the bales would have been a dead giveaway (I only realized this long after in a blinding flash of the obvious).

I do not recall if the buyers ever expressed any issue after the sale, so I will never know the truth, but the arrangement of the bales was consistent with the less desirable situation.

 

Scenario #2

 

In the second scenario, my clients also expressed surprise and said that in seventeen years, they had never had water issues. 

This situation was compounded by two major factors: I was related to the clients, and if this was indeed a recurring issue, it probably constituted a material latent defect, which the clients and I legally had to disclose. 

I found myself again in a no-win scenario and had to determine what to do. If the sellers were correct, disclosing this would improperly affect them negatively; if they were wrong, not disclosing would affect everyone negatively.

Like most agents, I had a lawyer I could call for a bit of free advice before deciding, which I did. I knew the clients well, and they had never once mentioned water in their basement, and we had just had a major rainstorm, so I again concluded that the most likely scenario was that this was likely due to the major flooding event. 

I chose not to disclose.

A couple buyers’ agents did ask if there had been any water problems, and we are legally required to answer all questions honestly, which I did. 

The home sold, passed inspection, and I never heard any more, so I am hopeful I made the correct decision.

I purposely chose these scenarios because sometimes non-disclosure is the correct response, but without sufficient evidence, the right thing to do is always to disclose. 

Did I do well? What would you do?

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]]> https://realestatemagazine.ca/disclosure-dilemmas-balancing-legal-and-moral-obligations/feed/ 4 Stigmatized and haunted properties: Edmonton’s Lorri Brewer with Gerald Tostowaryk https://realestatemagazine.ca/stigmatized-and-haunted-properties-edmontons-lorri-brewer-with-gerald-tostowaryk/ https://realestatemagazine.ca/stigmatized-and-haunted-properties-edmontons-lorri-brewer-with-gerald-tostowaryk/#respond Thu, 24 Mar 2022 04:00:06 +0000 https://realestatemagazine.ca/stigmatized-and-haunted-properties-edmontons-lorri-brewer-with-gerald-tostowaryk/ After a near-death experience, Edmonton Realtor Lorri Brewer’s life changed dramatically, taking her along a path she never considered.

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]]> After a near-death experience, Edmonton Realtor Lorri Brewer’s life changed dramatically, taking her along a path she never considered.

She now specializes in stigmatized properties. Come along for an out-of-this-world real estate story as I interview Lorri about stigmatized properties, disclosure requirements and haunted houses. Whether we believe in the possibility of these types of experiences or not, it has been a challenging road for my guest and we should be open-minded about the possibilities we explore in this video.

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