By Natalka Falcomer

The scenario: your client is selling a property. You’ve done your due diligence and you’ve pored over all kinds of research to make sure you have the right listing price. You don’t list the property on MLS because you already have a few potential buyers lined up. What is more, you tell your client that you can cut her a “deal” on commissions if you find an unrepresented buyer.

Within two weeks, you find a buyer through word of mouth and start negotiating. You give away nothing as far as details about the property or the reason your client must sell. The deal closes, and you get a nice hard-earned cheque in your pocket…and then the real estate regulator comes knocking because your client claims that you violated the law.

Why is your client and the regulator claiming your broke the law?



Most regulator complaints are rooted in the fact that the Realtor’s client believes the agent acted either unethically or unprofessionally. Clients holding this belief typically claim that the agent wasn’t transparent about how she collected fees, found buyers or marketed the property. In other words, the Realtor failed to act in the client’s best interests and didn’t fulfill her fiduciary duties.

“So what?” you may say. “A complaint can go away and the fine can be small in comparison to the commission cheque!” Think again. News about a complaint is likely to spread wide and far, not to mention that the hard-earned client will not be sending you any referrals. And the standard for “conviction” at the regulator isn’t as high as a criminal case. The proof only must show that on a balance of probabilities you committed “the crime”. This is a much easier threshold to meet than the criminal evidentiary threshold of “beyond a reasonable doubt”.

A complaint “disappearing” also doesn’t automatically mean that you won’t get sued. In fact, we’re seeing a steady rise in the willingness of clients to file complaints against agents for unprofessional behaviour. And worse, get a litigator involved.  This means that the industry’s unofficial “way of doing things” – such as withholding listing information and not collaborating with agents – is becoming less acceptable.

If a threat of lawsuit doesn’t compel you to be more transparent, then understand that you’ll lose clients. Today’s clients – especially millennials – are becoming more sophisticated and they’re demanding more transparency, collaboration and advisory support, not “sales” tactics or an agent who has an Instagram following. Today’s client, essentially, wants a fiduciary. Fortunately, this demand is completely in line with the law.

A “fiduciary relationship” is a common law concept that creates another layer of protections for your client and another list of prohibitions against what you can and cannot do. This fiduciary duty, which includes the “duty of loyalty”, is the most onerous because of its broad scope: you can never put yourself in a situation where you’re even slightly tempted to do something that is not in the best interests of your client.

Your fiduciary duties stand separate from and in addition to all your responsibilities under the Real Estate and Business Brokers Act, 2002, its Code of Ethics, CREA’s Code of Ethics and the CREA Standards of Business Practises. Your job is to get your clients the best “bang for buck”.  This means that you may be violating the law by not working with co-operating brokerages, withholding listing information and not sharing commission.

To attract clients, don’t waste your time on Facebook posts and Instagram pictures. Rather, attract clients and avoid both litigation and a regulator complaint by disclosing all forms of information and co-operating with other Realtors. In fact, being the “trusted advisor” today’s client is looking for is consistent with Canadian case law: agents are to “always act in your client’s best interests and (to) make full disclosure of everything you know respecting the sale of the property that would likely influence your client’s conduct.” (Ocean City Realty v A &M Holdings Ltd, [1987] BCJ No 593, 36 DLR (4th) 94 BCCA).

If the law isn’t enough of a reason to rethink how you practice real estate sales, there’s another benefit: disclosing and co-operating helps repair the very damaged reputation of agents among the public. Embracing our role as fiduciaries shows that we’re more than salespeople; we offer value as skilled advisors who help our clients navigate the complexities and nuances of a deal.

2 COMMENTS

  1. Excellent Article. Could not have said it better myself. Unfortunately reputation of Realtors is being damaged by bad apples out there. The collapse of the real estate market last April ended a boom time for realtors and brought the market back to more typical conditions in which long hours and extra marketing result in good, but not great compensation. The only way to survive in any market situation is to offer an Honest and Reliable Service, which can be passed on by word of mouth to other potential clients.

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