BY AVI ROSEN AND DOMENICA NUNNO
In Canada, your real estate agent works with you to list,
market and sell your home at the best possible price, or to find a house that's
right for you. Your agent also helps you to deal with banks and mortgage
brokers and inspection agencies. What the agent does not do, is the legal work
necessary to close the deal and transfer title. Your lawyer does that. In
Scotland, the legal profession runs the Multiple Listing System and charges
people a reduced commission. In Canada
this idea has generated interest among lawyers and others.
Ontario’ Real Estate and Business Brokers' Act (REBBA)
requires you to be a licensed real estate agent to trade in real estate, but
REBBA does allow an exception for auctioneers, builders who sell their own
product and for lawyers. Current REBBA regulations allow lawyers to act in the
capacity of agent as “part of their practice”.
“The problem,” says Alan Silverstein, a Concord,
Ont. real estate lawyer, “is what do you mean by `part of their practice?’
Does a lawyer have to be doing predominantly real estate work? Or can he do it
on a one‑off basis in a litigation or family law practice?
“What complicates the issue even more,” he adds,
“is the question of commission, because elsewhere in REBBA, there's a
paragraph that says that a licensed agent cannot split commission with anyone
else.” The situation may change. A lot will depend on whether the new
REBBA continues with the exception, or eliminates it.
Having the issue on the table, Silverstein believes, is good
for the consumer. “It's causing the real estate industry to look at
itself, and question whether it's doing the best it possibly can for the best
possible fee because now they have a threat from the outside.”
Arguments up until now have focused on consumer protection.
Lawyers have insurance, but prior to Sept. 1, 2000, real estate agents in
Ontario did not have mandatory insurance. Now they do. Lawyers also have a
compensation clause, but before Sept.1, 2000, the real estate industry did not
have deposit insurance. Now it does.
The real estate industry is also doing something the legal
profession is not -‑ mandatory continuing education. Silverstein says that all
professions should adopt the same rules. The playing field is becoming much
What seems to be missed in this equation, is the fact that
the real estate industry in Scotland is very different from the industry in
North America. We have a hands‑on industry.
In other parts of the world, the vendor does everything for himself and
deals with his lawyer only when he and the purchaser have already negotiated.
The lower fee reflects lower service.
The service level here can covers everything from advertising to help
with relocation issue. The average
lawyer will have no interest in sitting at an open house on a Sunday afternoon.
The real estate industry is not alone. Lawyers have had
competition from title insurers and closing centres. The travel industry has
gone through it with companies who sell travel plans through the Internet.
“Everybody is coming under the gun and everybody is having to justify
their existence and their fees. As a consumer advocate that's a good for
everyone,” says Silverstein.
Avi Rosen is a 30-year real estate broker, author, and
writer. (416) 229 4454.
Domenica Nunno has been a sales rep with Royal LePage
Partners for 15 years.