Better enforcement, steeper fines: What's needed to fix the real estate industry

The association that represents real estate agents in Ontario says more needs to be done to protect consumers and punish agents found to have engaged in unethical behaviour.

'I think one example of this is too many': Ontario Real Estate Association reacts to Marketplace investigation

The Marketplace investigation looked at so-called 'double-ended' deals, meaning the same agent represents both the buyer and the seller. (CBC)

The association that represents real estate agents in Ontario says more needs to be done to protect consumers and punish agents found to have engaged in unethical behaviour.

Tim Hudak, CEO of the Ontario Real Estate Association, spoke out in response to a CBC Marketplace hidden camera investigation that documented real estate agents breaking the rules in an effort to double their commission.

Hudak, best known for his time as leader of Ontario's PC party, called the hidden camera video released so far "disturbing" and vowed to make sure more is done to crack down on agents who behave unethically.

"That kind of behaviour can't be tolerated. If there are people who are breaking the clear rules that exist or violating the realtors' codes of ethics, they're on their own," he said.

"I think one example of this is too many."

In the Marketplace investigation, CBC producers visited several top Toronto-area real estate teams, posing as homebuyers. In several cases, agents who held a listing promised to give our producers an advantage in a bidding war if they worked with them.

Tim Hudak says he thinks the act regulating realtors can be modernized and he says he's set up a meeting with the minister 'to do exactly that.' (Darren Calabrese/Canadian Press)

This is against the Real Estate and Business Brokers Act code of ethics, which requires that real estate agents act fairly and in the best interests of their clients.

"We're not talking about an ordinary exchange, this is the biggest purchase you're going to make in your life, this has a highly emotional value to all of us. This is where we raise our families," Hudak said.

Hudak aims to 'modernize' act

Hudak may be new to his post at OREA — his appointment was announced in August  — but the real estate industry is familiar ground. As Ontario's minister of consumer and business services in 2002, Hudak helped bring the Real Estate and Business Brokers Act (​REBBA) into law.

But now, he says the act that governs the real estate industry needs to be reformed.

Real estate agents breaking the rules: Marketplace hidden camera investigation

6 years ago
Duration 0:48
Marketplace investigated 'double-ended' deals, meaning the same agent represents both the buyer and the seller, and found some agents broke the rules by offering unfair advantages to potential clients in an effort to secure both ends of a deal

Hudak plans to meet with Marie-France Lalonde, Ontario's minister of government and consumer services, to discuss next steps.

"I think we can modernize that act and I've set up a meeting with the minister to do exactly that," he said.

Specifically, Hudak said he wants REBBA to allow for higher fines. He'd also like to see greater enforcement and investigative powers for the Real Estate Council of Ontario (RECO), which regulates agents in the province.

Regulator has to be 'nimble'

Hudak said that realtors who "want to break the laws, they're going to be clever about it, they're going to move fast, the regulator has to be equally nimble."

To do that, RECO should be able to proactively investigate agent behaviour even when the regulator has not received a complaint, he said, without offering specifics on how that might work.

  • Watch the Marketplace investigation at 8:00 p.m. (8:30 p.m. NT) on Friday, Nov. 4 on TV and online

And fines, he said, need to go way up.

Currently, the maximum fine RECO can levy against an agent is $25,000. Hudak said he thinks that should be doubled at a minimum.

In practice, most fines are much smaller. For unethical behaviour in a double-ended deal, those fines are typically in the $3,000 to $5,000 range.

By contrast, the typical amount an agent with double commission would earn, based on the average Toronto home price, is about $40,000.

Double-ended deals

The Marketplace investigation looked at double-ending, where the same agent represents both the buyer and the seller.

Double-ending is legal in most of Canada, as long as it's disclosed to all parties involved in the transaction. The exception is Alberta, where the same agent can't negotiate for both sides.

Hudak said that he doesn't think the practice of double-ending needs to be banned, saying he doesn't think it's always to the consumer's detriment.

In June, British Columbia premier Christy Clark announced that she wants to ban the practice of double-ending in that province in order to protect consumers. New legislation is expected in that province before the end of the year.

Hidden camera investigation

For the hidden camera investigation, Marketplace staff posed as homebuyers and visited 10 real estate agents in the GTA, and documented the interactions.

Most of the real estate teams in the Marketplace investigation double-ended at least 20 per cent of their deals last year, more than twice the average among top real estate agents in the GTA, according to statistics shared by industry insiders.

Marketplace staff also visited some after receiving tips about past behaviour.

Six out of 10 agents promised to share confidential information and give an advantage if they were to represent both parties in a bidding war.