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Thread: Double Ending ?

  1. #1
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    Double Ending ?

    Greetings all


    http://www.cbc.ca/news/canada/britis...ding-1.3676992,
    Vancouver real estate agent's deception prompts debate on 'double ending'




    A Vancouver real estate agent has been suspended after admitting she went to great lengths to conceal the fact that she was double-ending a deal.

    Lin (Kelly) Kong asked another agent to fill out paperwork saying he was representing a buyer he had never met, so Kong could avoid negotiating with her seller over commissions.

    The case highlights systemic issues that arise when agents represent both buyer and seller in a deal. Some question whether a ban is the right solution.

    Kong was reprimanded by the Real Estate Council of B.C. for her "deceptive manner" and handed a 90-day suspension in early July.

    Secret double-ended deal

    According to a statement of facts, Kong was the listing agent for a $1.3-million house in Burnaby, B.C. in 2014.

    When a buyer who did not have an agent made an offer on the house, Kong told him she would represent both his and the seller's interests.

    However, Kong asked Yang Yang, a Realtor from a different brokerage, to sign documents saying he was the buyer's agent even though the two parties had never met or spoken to each other — a violation of Real Estate Services Act.

    In the signed documents, Kong says she explained her actions to the buyer and told him she was only adding Yang's name so the seller would not attempt to negotiate her commission. But the buyer claims he was never told..

    Yang says he signed the papers as "a favour" to Kong without realizing the implications.

    He was also disciplined by the council and has already completed a 60-day suspension.

    When contacted by CBC News, Yang said he did not want to comment on the case and Kong did not reply to any messages.

    To ban or not to ban?

    In addition to the suspension, Kong was also fined $1,500.

    William McCarthy, a past president of the Institute of Real Estate Management, says that's a pittance compared to the amount she likely collected in commission, estimated at about $37,000.

    McCarthy, who still acts as an agent, says dual agency should never have been allowed in the province.

    "How can one person serve two masters?" he asked. "It's a perpetual conflict of interest."

    An interim report issued by an advisory group tasked with reviewing B.C.'s real estate industry has already recommended putting an end to the practice.

    Real estate council advisory group
    The real estate council's advisory group has recommended the province no longer allow deals in which Realtors represent both buyer and seller. (RECBC)

    McCarthy says with such high financial returns at play and no policies against it, it's "very, very tempting" for Realtors to want to represent both parties.

    "If you look at this case in particular, the agent in question took a deliberate attempt to not only act as a dual agent but to cover up the facts."

    But Tom Davidoff, a housing economics professor at UBC, calls a potential ban draconian.

    "Part of the benefit of a good Realtor is that they've got a good network," he said.

    Tom Davidoff
    Tom Davidoff, a real estate economist at UBC's Sauder School of Business, calls an outright ban on dual agency 'draconian.' He thinks more emphasis on disclosure is a better approach. (CBC)

    "Double ending is a tough one because exploiting your network to bring in a buyer isn't inherently a bad thing," he said. "Banning it can get rid of some legitimate transactions."

    Davidoff cautions a ban could create situations in which agents do "favours" for each other by enlisting friends to act on either side of a real estate transaction in return for kickbacks.

    Instead, Davidoff favours stronger regulation on mandatory disclosure — giving buyers and sellers the chance to decide what they want for themselves.

    Buyer beware

    To prevent potentially shady deals, McCarthy says the Independent Advisory Group's recommendation for far more significant penalties can serve as a deterrence.

    The new recommendations would leave Realtors on the hook for up to $250,000 instead of the current limit of $10,000.

    McCarthy says typical commission levels hover at around seven per cent for the first $100,000 of a sale price and then drop to 2.5 to three percent for the remainder of the price of the house.

    According to the Real Estate Board of Greater Vancouver, the benchmark price for a typical detached home in the area is $1.4-million.

    Regardless of what changes come after B.C.'s real estate industry becomes independently regulated, McCarthy recommends "buyers beware".

    Christy Clark
    B.C. Premier Christy Clark has said the government is ending self regulation for the B.C. real estate industry and a new Real Estate Superintendent will be hired. (Rafferty Baker/CBC)

    He says those looking to get into the market should start by doing background checks on potential agents.

    "​You check the resumé. You check their records. You check with former clients. You check with the agency. You try to see if they have any complaints or charges against them as best you can," he said.

    Even consider whether their managing brokers are reputable as they provide another level of oversight within their offices, he said.

    And finally, he believes clients need to stay engaged to keep an agent on their toes.

    "Be demanding ... expect a lot from them because they're getting a lot from you."

    Cheers




    Booker

  2. #2
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    Hi Booker

    If buyer gets a price making the deal preferable to them over not buying, along with seller getting a price preferable to them over not selling... where is the actual conflict in this voluntary transaction that benefits all parties involved?

  3. #3
    Quote Originally Posted by PopeDover View Post
    Hi Booker

    If buyer gets a price making the deal preferable to them over not buying, along with seller getting a price preferable to them over not selling... where is the actual conflict in this voluntary transaction that benefits all parties involved?
    The odds that an agent will get a good deal for both sides is just that much smaller. As they don't have to pay the 2nd commission to the other agent the double-ended agent will push for a worse deal for 1 party because the agent still gets more.

    It's always possible all 3 parties do ok - but more likely the agent pushes the deal through when the seller could have made more $ because accepting that buyer's offer increases the commission by a lot than looking for a higher offer from a buyer with agent representation.

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    Quote Originally Posted by PopeDover View Post
    Hi Booker

    If buyer gets a price making the deal preferable to them over not buying, along with seller getting a price preferable to them over not selling... where is the actual conflict in this voluntary transaction that benefits all parties involved?
    Hello PopeDover


    Good question .
    My first one to you have you ever purchase many real estate properties ?
    Transparency isn't possible in that context .
    Many examples not only the one sited here shows ,that you cannot serve to masters at once and please them both .
    They are other fields where Double Hats also creates problems .
    IA Police investigating Police from the same force .

    To ensure transparency ,different organization or people can better service the interest of clients .

    One close friends was involve recently in a real estate transaction where the listing agent was also the selling agent .

    In real estate the seller assumes the full commission of the agent ,but in that specific scenario the agent favored the buyer .

    By not relating messages of request because she was scared that the buyer would withdraw there offer and then loose her $20,000 commission .



    In B.C. contrary to Quebec a notary or lawyer cannot represent both parties specifically for the purpose of transparency .
    Titles are then examine by both party legal counsel ,ensuring the transactions go smoother .

    I have purchased many properties in both Provinces ,the law in B.C. for this makes more sense






    Cheers





    Booker

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    Quote Originally Posted by Gobroncosgo View Post
    The odds that an agent will get a good deal for both sides is just that much smaller. As they don't have to pay the 2nd commission to the other agent the double-ended agent will push for a worse deal for 1 party because the agent still gets more.

    It's always possible all 3 parties do ok - but more likely the agent pushes the deal through when the seller could have made more $ because accepting that buyer's offer increases the commission by a lot than looking for a higher offer from a buyer with agent representation.
    Hello Gobroncosgo


    Excellent observation .

    In some fields of professional practices such as lawyers ,forensic accountants , they cannot represent the 2 parties ,http://flsc.ca/supreme-court-of-cana...nterest-rules/,

    The rule prohibits a lawyer from representing one client whose legal interests are directly adverse to immediate interests of another client, even in unrelated matters, unless both clients consent.


    These rules are designed to protect the public interest






    Cheers




    Booker

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    Quote Originally Posted by BookerL View Post
    Many examples not only the one sited here shows ,that you cannot serve to masters at once and please them both .
    They are other fields where Double Hats also creates problems .
    IA Police investigating Police from the same force .
    Booker
    but in a legal matter, both sides don't have the option to back out of the deal if it's not acceptable, and that's what I cant get past. I'm also assuming proper due diligence is done completely independent of the agent, regardless of whether the agent is also working for the other party. It just seems to me that a good agent working alone can create a win-win for everyone, and shouldn't be penalized because of potential conflict for other clients more vulnerable to be cheated for whatever reasons. Maybe not a popular opinion, but sometimes these consumer protection type of laws seem to create hidden inefficiencies that everyone pays for.

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    Quote Originally Posted by PopeDover View Post
    but in a legal matter, both sides don't have the option to back out of the deal if it's not acceptable
    Hello PopeDover

    Well in depends in what jurisdictions maybe ,in the ones I am familiar with a client can fire is lawyer
    at anytime before a binding deal as been signed


    ,
    Quote Originally Posted by PopeDover View Post
    and that's what I cant get past. I'm also assuming proper due diligence is done completely independent of the agent, regardless of whether the agent is also working for the other party.
    Well the motivation factor for a real estate agent is the commission ,when he has full commission because he is the listing agent and the selling agent ,it may it some circumstances throw is away is due diligence .



    ,
    Quote Originally Posted by PopeDover View Post
    It just seems to me that a good agent working alone can create a win-win for everyone, and shouldn't be penalized because of potential conflict for other clients more vulnerable to be cheated for whatever reasons. Maybe not a popular opinion, but sometimes these consumer protection type of laws seem to create hidden inefficiencies that everyone pays for.

    I have presently 2 partners that are real estate agents, in am the financing partner through corporations,I have seen tha conflict of interest ,last year they wanted me to sale a condo that One of my corporation owns without them ,there suggested listed price was below cost .

    The other factor which is not due diligence ,that had hidden the fact ,they had reached maximum borrowing capacity with all banks ,rendering the sale of that property futile and unnecessary to get cash down for a larger multi-Dwelling investment property .


    The commission on the sale was there motivation factor ,nothing else .
    This situation happens more often ,then the reverse .
    I have learned afterward that one the partners was crawling in credit debts .

    My corporate lawyer ,spoke with one of the actual lending banks,there answer, was they do not have sufficient securities ,which a polite way to say they are high risk .

    Cheers





    Booker
    V

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