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Advisory Panel Recommends an End to 'Double Ending' and I Agree

An Image of downtown Calgary

How can you represent both people and double end a deal?


A partial report was issued recently by an advisory group tasked with reviewing Vancouver's real estate market.  The report is recent, having only been issued in last week (mid April 2016).  The report points towards the need for bigger fines for unethical realtors and placing an end to 'double ending'  where a realtor represents both sides of one transaction.


The reasons behind putting an end to 'double ending' have to do with the conflicts that can arise when a realtor is representing both a buyer and a seller.  The report has to do with recent complaints based around misleading and predatory sales tactics by realtors in Vancouver.  The head of the advisory group, Carolyn Rogers when asked about realtors who double end sales said this


" Real estate licensees are expected to act at all times, solely in their client's best interest," 


She went on to further state:


"It is difficult for most people to understand how this advice and this obligation can coexist with rules that allow a licensee to represent the interests of a buyer and a seller in the same transaction given the inherent conflicts between those parties' interests."


Are your clients not your first priority?


How if you are double ending a sale can you act in your client's best interests?  The importance of representing the seller, who has decided to place their trust in you, to look out for their interests, while selling probably their largest investment,  their home, should take precedence.  All too often we see realtors murky the waters when the possibility of a double commission appears.  Representing the interests of your client should take precedence over the opportunity to make an extra commission.  If the real estate industry wants to move away from a negative reputation it needs to be about the relationships that we build with people, not the commission cheque.  That is the key to long-term growth in this industry, treating others as you would want to be treated; that likely does not involve throwing away your fiduciary duties to a client just to make a little more money.


How can double ending a transaction go awry?


Lets go back and look at the recent example of unethical behaviour that I had with a listing  a realtor.  The story about how the seller combined with the selling realtor were attempting to offer increased commissions to the selling realtor.


In this story the selling realtor was being offered additional commissions from the seller to bring in an offer on his property over $1,100,00.  For any offer over this amount the seller was going to split the commission difference in half with the realtor.  Do you think that if a buyer walked into that house and was interested in purchasing it, that the selling realtor who has already demonstrated unethical behaviour would look out for the buyer's interests in a 'double ended' transaction?  Or do you think he would provide the buyers recent sales data that confirmed his listing was worth more than $1,100,000, knowing that he  could split the additional sale price with the seller?  This is certainly not the case with every real estate transaction but this realtor had already shown unethical behaviour and I think it is easy to believe he would do it again; especially when no one was watching and he could profit potentially an extra $25,000 or more.


Why I moved away from 'double ending'.


Last year I made the decision to move away from 'double ending' real estate transactions for myself.  I feel there are numerous reasons why a conflict of interest could arise in a real estate sale and I never want there to be a hint of a conflict or the possibility that it could be assumed I that have done something in my own interests.  I realize the importance of representing those that have entrusted me with their biggest investment, their home.


Last year I decided that instead of profiting an extra commission on a transaction that I would prefer to represent my clients to the best of my ability.  To do this I can't reasonably ask a client to become a customer or to relinquish some of my obligations to them as a client at the final moments of their home sale, just so that I can benefit from both commissions. 


The Story Behind My Decision.


The listing that produced this change in my opinion in 'double-ending transactions' was located in the community of Strathcona Park in Calgary's South West.  The seller originally contacted me to work with him after seeing me sell a home down the street from his in less then five days.  He wanted an idea of what is home was worth and wanted to know if I could sell it for him.  During our initial meeting at his home I was surprised to find out that a couple realtors had been there before me and had suggested a sale price to him that was significantly less then the true value of the home.  I was confident I could sell his home for almost $50,000 more then the other 'neighbourhood specialists' who had already been to his home.


My initial thoughts were that they were not taking into account the value of his amazing downtown view.  I had looked into the sales in the neighbourhood, compared the sale prices of homes with a view to homes without a view and established a marker of the view being worth close to $75,000.  Maybe the other agents had missed it, or hadn't done there homework to see what the view was actually worth.  Then, I thought it was likely a combination two things. First, it was likely just a case of the other realtors simply not doing their homework, I bet that pulled the recent sales in the neighbourhood and compared apples to apples but this home was an orange.  My second thought was  that the 'area specialists' were simply telling him a lower number just so they could get his home sold faster. Everyone knows pricing is important and in this case they were suggesting a price that would move the home in a few days.  Why not try to get the seller a higher value? What the home was actually worth! 


After our initial meeting we went through my normal process of getting a home ready to list that allows me to get homeowners on average an additional $10,000 per sale compared to the other home sales in Calgary.  We even went one step further with this home and he decided to do a pre-inspection.  The seller wanted to make sure there were no surprises with the home, nothing that would reduce the value of the investment to a buyer, nothing that would perhaps make a buyer want to purchase another home.


The approach worked and we were able to get the seller over $30,000 higher then what the previous realtors had told him his home was worth.  We likely could have gotten the seller more money if his timeline to sell was longer but he wanted the home sold in less then 10 days so, we did a price drop in the first week which effected the final sale price.


With a short timeframe to sell I felt it was imperative to get as many people through the home as possible.  The home had an amazing, unobstructed downtown view and we needed to get as many people as possible through the home so that they could see it and want to move to purchase the home quickly.  To do this, I decided to host back-to-back open houses for the first two weekends.  During one of these open houses, I can't remember which, I met the eventual purchasers for the home.  The couple loved the view, loved the home and decided they wanted to write an offer. 


I did what you can do in this situation if you decide to work with both the buyer and seller.  I provided them with recent sales data and let them know that I could not disclose the seller's reason for selling, his motivation for pricing or give them advice on a price to offer.  At the time the buyers were ok with this and we went through the process of putting together an offer for them as if I was working with them like customers.  It has always been my view that in a 'double end' situation that I want to continue working with the seller as a client and work with the buyers as a customer.  This way I can continue to work with the seller in mind but then who advises the buyers?


What made me change my mind.


Then I sent the buyers the Customer Acknowledgment form and right there in section 2.1 (a) it states


2.1 (a) we have no agency obligations to you, especially fiduciary ones.  In a fiduciary relationship, you rely on someone to act in your best interests.


2.1 (b) we cannot use our judgement on your behalf, give you advice, or act in your best interests.


2.2 (c) not give you information or advice that is not in our client's interests


I read it and thought, is this the way I want people to think I do business?  The first two lines of this form basically say I am not looking out for you nor do I have any obligation to do so, in fact I am actually looking out for the seller.  It was at this moment that I decided this was not the type of realtor that I wanted to be.  I contacted the buyers and discussed with them how I felt that they should have someone looking out for them and that it could not be me as I had been entrusted by the seller to look out for him.  Following that discussion we decided it would be best if the buyers were represented by another agent in my office.  I told them that I would put them in touch with another ethical agent who would work hard for them and make sure that every concern they had was addressed.  Based on the client relationship I had with the seller I could not even recommend to them that they get a property inspection and the home was older, needed work and they were first time home owners.  If just felt right to make sure someone was looking out for them too.


The following morning I reached out to the buyers and they told me that they had received a referral to a real estate agent that they would like to work with.  One of the buyers was a lawyer and she decided to reach out to the real estate lawyer in her firm to get a referral.  Now keep in mind this agent feeds that lawyer with referrals, even if they weren't the best agent they would have likely referred them to this individual to make that realtor happy; ensuring further business from them in the future.


Why I refer to other agents who look out for their clients too.


The deal was likely one of the easiest that the buying realtor had ever done.  I had shown the property to the buyers twice and had already put together an offer for them.  The new 'buying realtor' simply crossed my name off the purchase contract and inserted theirs.  How professional... During the negotiation process the new buying realtor tried to hammer us on price but it was pretty easy to say to her that she had not even stepped into the property.  She was using the recent sales in the neighbourhood just like the realtors before her, she didn't know what the view was worth and was trying to base the offer price on her perceived value of the home, not the actual value.


In the end we stood firm and got a good price for the seller.  The buyers did a home inspection and both sides came to an agreement on a further discount in price due to a few points that were brought up in the inspection.  The unfortunate thing was that the buyers were not really represented.  The buying agent was truly a mega-agent, they were so busy that they had little time to respond to the questions the buyers had about the process and what happens next.  I felt bad for them and helped them where I could.  They reached out to me several times because 'their agent' would not respond to their emails and calls.


I think there is value in working with an agent that represents your interests and has the time to work with you and answer your questions.  Yes agents that do 100s of transactions a year are experienced in the salesmanship of real estate but are they experienced with really looking out for the interests of their clients?  In this situation the buyers felt that after the sale was firm that their agent was 'too busy' to respond to them.  The sale was made, commission earned, moving on. That was how the buyers felt.


This is why it is important to me to refer a potential buyer who is interested in a property I have listed to another industry member that I know, will look out for their interest too.



What is the Solution?

If we are supposed to look out for the interests of our clients first then, I am in agreement with the advisory group in BC.  We should put an end to 'double ending' transactions and realtors should not be allowed to represent both the buyer and seller, whether through a customer relationship or as a client.  My personal solution to this situation is this:  I don't double end transactions, I refer to another agent that i know will represent the interest of those buyers as best as possible; not just a top producing agent who might be more concerned with making their next commission and not building a relationship with, and fulfilling their duties to their clients.  

I know that this approach is the way to continue to have a positive impact on people's lives, ensuring that I will continue to receive reviews where people consider you to be a 'trusted partner' like the one featured in the Community section of my newsletter from Zied or found on my Google Reviews last month.


Why do we need to wait for an advisory board to tell us this?  If we want to salvage the reputation of the real estate industry we need to give people the confidence that we are really putting the interests of our clients first.


Until next Monday, have a great week!


Talk soon, 



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