The Office of the Superintendent of Real Estate in B.C., a newly created government overseer of the industry, has decreed that an agent must not, and indeed cannot, double-end a deal. The ramifications of this amplified rule, which takes effect on March 15, are just now beginning to sink in on licensees in the province.
While it is true that “dual agency” was outlawed many years ago, agents had moved to either a “limited dual agency” or offering “no agency” to buyers who came knocking on the listing agent’s door. This was a work-around solution to allow licensees to continue to double-end deals.
The new increased scrutiny of “implied agency” that the government regulator is enacting will all but put an end to the notion that calling one side of a double-end a “customer” somehow is in the consumer’s best interest. This will have dramatic impact on the old-school listing agents who would make viewing their listing difficult for buyer agents.
The new regulations in B.C. will also have a significant impact on larger real estate teams. In fact, the traditional business model of a team, where the leader was the “rain-maker” and the other members acted as buyer agents, will no longer be possible in this new regime. B.C. rules require that team members are all included by name on the listing contract and are considered designed agents of the seller when a team member takes a listing. As a result, a team member working with a buyer will not be able to sell a team listing because that is considered dual agency.
The motivation for making the changes in the regulations in B.C. is primarily politically driven. The anger of the consumer was a lightening rod for the politicians, who have struggled with identifying the causes and solutions for the affordability crisis that has befallen the Greater Vancouver Region. To demonstrate that they were acting to address the issues that the heated real estate market had created, the then-Liberal government in power stripped the real estate industry of self-governance. Additionally, new taxes were introduced to discourage certain groups of buyers from entering the Greater Vancouver market.
All these attempts to create a market fix ignore the core reason that the market has continued to climb out of the reach of the average consumer in B.C. The truth is, the Greater Vancouver area has become a highly desirable location to live. When you couple that fact with the scarcity of land between the mountains, the sea and the agricultural reserve lands, a supply issue is created.
What makes matters worse in Vancouver is that many of the older neighbourhoods have been shielded from the demands of densification by local politicians on the municipal level. When there is only one pair of shoes in the shoe store, and there are 10 people barefoot outside the store, the price of the shoes will rise. This is the simple fact that Greater Vancouver faces. It is a supply problem, not a Realtor problem, and certainly not a foreign buyer problem.
The bigger issue of home ownership in a tightening inventory also can be traced to the evolving collective thought and subsequent values in our culture. Our society in North America has been slowly evolving from a religion-based mindset to a humanist mindset. Humanism has become the prevalent world view, even among those who attend church regularly.
Within the general concepts of humanism there are three branches of thought: liberal humanism, social humanism and evolutionary humanism. While the 20th century will be remembered as the era of failed social humanism, with the fall of communism and a move away from socialistic values, liberal humanism seems to be taking hold in our society. Liberal humanism sees the individual’s feelings, rights and values as society’s most important watermark. Liberal humanism is best identified with phrases like, “If it feels good do it”, “The customer is always right”, “Think for yourself and you will find the answers within”.
With liberal humanism, the social good is a by-product of the individual seeking to better themselves and their own surroundings. Social rules, rights and order are secondary to the individual.
This emphasis on the individual’s rights and feelings makes the need for surrendering value, or property for the common good, a difficult proposition in municipal politics. When a high-rise building is proposed in an area that abuts single-family homes, the cry of the residents who argue that the shade of the building will hurt them, their children and their quality of life is considered a greater element than the need to reduce the cost of housing. Where once religion would dictate that the homeless should be sheltered because God placed that task on society, now the humanist doctrine suggests that we only help the homeless when it makes the individual contributor feel good.
The evolutionary branch of humanism addresses the affordability issue from a Darwinistic point of view. This thinking suggests that it is the survival of the fittest that prevails in society. The more one can build wealth and accumulate property, the better. After all, it was hard work and superior skills that provided for a Vancouver lifestyle. This mind-set contends that a person should seek to win at all costs because that is the way nature intended it.
It’s unfortunate for those who lament the rising costs of property in Greater Vancouver that the pressures of the capitalist economic system also weigh in against slowing down the accelerated growth and demand. When there is no centralized system to limit financial gains in the real estate sector of the economy, of course the owners of the properties will take whatever they can get for their asset. In this age of data processing and open information, consumers can see what their neighbour’s property sold for, and they want the same or more for their property. In a scenario like we find in Vancouver today, with limited supply, property owners can demand, and indeed expect, an ever-increasing sticker price for their homes.
The truth is, supply of housing is limited in Greater Vancouver and given the physical realities, coupled with the political and social mind-sets, there is no quick answer. Placing limits and additional restrictions on Realtors is like shooting the piano player because you don’t like the tune. The problem of affordability is much more complex and deep than any of us realize. Apart from ways of increasing supply to meet demand, the only quick fix would be a major natural catastrophe, to scare buyers away from Vancouver, or a sudden interest-rate jump. Both of those answers would create more problems than they would solve.