Imagine a car dealership placing ads in the newspaper for cars which were already sold. The customers arrive at the dealership at which time you bump into another buyer who tells you on the QT that many of the cars they led you believe were for sale, might have actually have already been sold, subject to the buyer’s receiving financing. He then goes on to explain that the boss told the manager to put the ad in, knowing full well those cars were sold because he wants to make the phone ring.
The manager was only following instructions. The boss also told him that if anyone calls on the ad, he must not under any circumstances tell anyone that they are sold, unless they specifically ask.
If a customer does ask him if one of the cars has been sold, he must avoid the question and instead try and trick them into taking it out for a test drive in the hopes you will want to write an offer. . (unless of course the car is not the subject of an accepted conditional offer, in which case he may tell you it has not been sold).
If a car is already the subject of a Conditional Sales Agreement, and the customer happens to phrases his question exactly in the form of “is this car the subject of an accepted conditional offer”, then he must inform them the boss has asked that he not answer that question and again try and convince them to buy it. (Unless the car is not under agreement in which case he may tell you it is not). The customer must ask about each and every car on the lot separately, in exactly the same manner, and the sales person is not under any circumstances to volunteer the information.
The sales rep must follow these instructions to the letter, for each and every car on the lot because the owner believes that if he makes it difficult enough, buyers will get tired of asking, will phrase the question wrong or maybe even forget to ask, in which case he can trick them into thinking that the cars are not sold, and he will be able to pit one buyer against the other.
If he is able to trick you into believing the car is available for sale, or if you just figure it out on your own, the dealer will negotiate the best price he can with you, but it will be conditional on the first offer falling apart. If your offer is accepted, he will use it as a negotiating tool against the first buyer. You will still have to give him a substantial deposit just in case, knowing full well that in all likelihood the first offer will close anyway, and he will have to refund it back to you.
This example demonstrates exactly how Alberta REALTORS® are now compelled to conduct their business. Since real estate in Alberta is regulated by the Real Estate Act (Alberta), the claim by the real estate board is that they are exempt from any legislation under the Fair Trading Act (Alberta).
Acting under advice of the Real Estate Council of Alberta, the Calgary Real Estate Board has implemented changes in their Rules and Regulations with respect to the boards reporting of conditional sales on the Calgary Real Estate Board’s MLS System®.
The Real Estate Council’s position seems to be that it is preferable to show a listing as Active, when in fact it has been conditionally sold, so long as the Seller directs their agent to that effect.
This decision has created a great deal of confusion amongst the general public and can actually have negative implications for Sellers listing their property on the Calgary Real Esate Board MLS System®. In their ongoing efforts to control everything, RECA® together with the Calgary Real Estate Board have taken another step towards removing any objectivity or the ability of agents to use discretion in dealing with their clients by further injecting themselves into the day-to-day transactions of REALTORS® in Alberta. They could take a lesson from our own Prime Minister in his dealings with the Michael Wright affair to see just how dangerous this can be.
Below is a section of a mandatory schedule which is now presented to the seller along with an offer. The seller chooses one box which decides how their conditional sale will be treated. I always get a chuckle out of item 4 because that statement makes the whole thing a complete exercise in futility.
In the end, most sellers will be influenced by their agent’s personal bias on the matter anyway. That could mean that their agent will recommend whichever option will be more likely to make their own phone ring, even if there is almost no chance the caller will be interested in purchase a property which is under contract. I don’t think that very many sellers which would appreciate having their lives disrupted by a parade of buyers who were tricked into viewing the property under false pretence.
Most sellers would rather their agent decide what is best for them. They get annoyed when they have to sign over every detail just to please the regulators. Once again, the regulators have turned a mole-hill into a mountain. This time they have completely destroyed the integrity of the data presented on the Calgary Real Estate Board MLS System® and have demonstrated that they do not trust their licensed agents to have the necessary conversations with their sellers on their own. As a result, it will be impossible to know what the true status of any listing is without having to make inquiries. The situation is untenable situation and since only the agent and seller knows which one they are operating under, is subject to abuse.
I do not object to Sellers have a say on how their listing is handled. It must be discussed. They have however, always had the option to continue showing after a conditional sale. What I do object to is how they have regulated that REALTORS® must now misrepresent the information on the Calgary Real Estate Board MLS System® and that is dishonest. The regulators have gone overboard in their need for control. Requiring supervised documentary evidence of every discussion an agent has with his client is not the way to go. They assume that REALTORS® are not capable of representing their clients without constant oversight, and must be monitored at all times. I predict that this new ruling will be tossed out as unconstitutional, and will die a slow death just as almost every one of their ill-thought schemes has in the past.
There are still ways to find out if a property is under contract. The rules of the game are as follows. For every property listed on the Calgary Real Estate Board MLS System®, before putting it on a tour the buyer (usually represented by their agent, so the buyer doesn’t really have to do this) needs to ask the listing agent “if the property is the subject of an accepted conditional offer.
If the agent answers “No, it is not”, then the buyer or their agent will know that the property is actually still available and they can go and see it.
If the agent answers “I have instructions from my seller not to disclose the status of the property” then we have to assume that the property is already conditionally sold, and therefore we needn’t bother viewing it. You won’t however find out if that transaction fell apart, in case you are still interested but don’t want to waste your time while another offer is in place, and this can be equally if not more detrimental to the seller than had they chosen to disclose the pending sale.
It is not good enough to ask the listing agent if the property “is still available” because the rules we work under provide that unless the question is posed exactly as specified, then it is basically fair to mislead the caller” so long as we don’t come right out and lie to them. This rule change has no material effect, except to make everything far more complicated, and to fool the buyers (especially non-represented buyers) into thinking that the subject property is available for sale when in fact it is not.
This new rule has so corrupted the Calgary Real Estate Board MLS System® data, that I am bombarded daily by phone calls and texts from active buyers who are confused by the status of listed properties, which need of clarification. Also, since the Sellers Agent may not be in a position to disclose whether the property is under contract, they also may not be able to tell anyone what the condition date is, or if there even is one.
That means it is now necessary to call each of the agents every day to see if they are now in a position to be able to answer the question yet, since there is no way to monitor this on the the Calgary Real Estate Board MLS System®. In many cases the listing agent may not return these follow-up calls.
The problem is exasperated in very fast markets, when time is of the essence, and a small mistake had have big implications for a buyer.
The new rule is in contravention of the REALTOR© Code of ethics (Canadian Real Estate Association).
- 3.2 A REALTOR® shall not intentionally mislead anyone as to any matters pertaining to a property.
- 4.3 states the REALTOR® shall not be party to any agreement in any way to conceal any facts pertaining to a property.
- 15.4 Significant conditions, restrictions, limitations and additional charges shall be fully and prominently displayed in the body of the advertisement
It is a rather sad day in Alberta organized real estate when its members are compelled to implement tactics in their day-to-day practice which seem to run contrary to the protection of consumers.
In doing so, every agent could become the subject of litigation for contravention of a number of other code violations, the ones above to name a few.
These types of operating practices are a step backwards to the days when agents may have been more reminiscent of snake oil salesmen than of real estate professionals. By following the creb® rule, we are breaking another, and this puts REALTORS® in a very bad position.
There is relatively new “U” status (Under Contract), status which has been implemented on the Calgary Real Estate Board MLS System®. It’s primary use is for agents who’s clients have requested that they use it. It is not visible to the public and this is where the problem lies. All that is necessary for any seller soliciting back-up offers without using trickery to accomplish it is to have their agent use the “U” designator if they so wish it.
- Display the “U” designation on the Calgary Real Estate Board MLS System® instead of hiding it, as it is now.
- Abolish entirely all other options for Active Listings. Consumers believe that Active listings are just that
Listing agents should be required to disclose the current status of a listing at the time a showing request is made, otherwise there is misrepresentation. Buyers should have a right to be able to make an informed decision, and get straight answers instead of being led down the garden path in the belief that a property is Active when it is in fact, under contract. Nobody ever feels good about being misled.
The Real Estate Council of Alberta seems to have taken the position that where advertising standards are concerned, what would be unethical for a business in just about every jurisdiction to do for themselves, in organized real estate it is perfectly acceptable and even desirable for the agent to do, providing they have been instructed to do so by the seller. I believe that this concept is fundamentally flawed. Further if RECA® wants REALTORS® to live up to the letter of the Seller’s Representation Agreement, the wording as it is written would indicate that the property should be advertised as Active right up to the possession date (Sale Date). I think that everyone would agree that while the current rule is unmanageable, to list properties as active until the sale occurs would be entirely irresponsible.
If you have been mislead or inconvenienced by the misinformation being presented on the Calgary Real Estate Board MLS System®, or just generally object to the principal of it – please file your complaint with the Calgary Real Estate Board at 403-263-0530 and/or call the Real Estate Council of Alberta at (403) 228-2954 and let them know how you feel.
This article is not intended to be offered as advice to clients who have signed a Written Service Agreement with another real estate agent.