Industry professionalism needed to build back consumer confidence
Particularly for buyers engaged in the Canadian real estate market, the transaction is filled with mounting complexities and undeniable frustrations – most specifically, the lack of transparency in under-market-value listing strategies within an already expensive market, and the perceived conflicts of interest this elicits among consumers toward professional REALTOR®s. In the interests of buyers and sellers, as they navigate limited housing supply, exceptional competition and associated affordability anxieties, it’s clear that the Canadian real estate industry needs to do better.
This starts by creating more standards of transparency in the pricing of properties, specifically focused on developing a fairer bidding process for all. It then continues within the offer process amongst prospective buyers to better manage their expectations, and those of sellers. This transparency helps to remove any doubt that a REALTOR®’s top priority is serving and advancing the diverse needs of each client.
Real estate should not be a side hustle practiced by those looking to make a quick buck. This undermines the credibility of the majority of REALTOR®s who treat this as a legitimate career, delivering critical advice to their clients every day. In a recent Leger survey commissioned by RE/MAX in February 2021, 86 per cent of Canadians who worked with a professional REALTOR® would do so again, suggesting that most REALTOR®s are fulfilling their professional duties. Yet, it’s not lost on us as industry leaders that perception is reality, and that the few can often undermine the many. New standards must be introduced, and fast.
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The scrutiny of Canadian real estate professionalism does not start and end with the consumer. Many of the industry’s own recognize that the practice of below-market-value listing strategies to spark bidding wars or enforcing blind bidding competitions are counter to helping clients engage in legitimate and affordable listings. Such practices also hinder a buyer’s capacity to make informed risk mitigation decisions about the transaction, such as the conditions they should include in an offer. A lack of transparency at the offer stage also increases the risk of buyers putting themselves in unnecessary financial jeopardy. If there was a time to make concrete updates to the practice of professional real estate, it’s now.
We recognize that most agents are doing their best within the confines of the current market, and that some of the push for blind bidding understandably comes from the seller. It’s the industry outliers who don’t do their best, who must be pushed out or forced to adapt their practices to that of the majority. The future of the industry depends on it.
Let’s take virtual listing platforms as an example. They have been widely available for some time, but their relevance and the inclination to use them grew in 2020. The opportunity for these platforms to replace the REALTOR® presented itself – but failed. The majority of Canadians surveyed who had recently used a virtual listing platform said they were likely to switch back to a REALTOR® for their next transaction. Why? Those same Canadians named ethical business transactions, empathy, effective communication, active listening and patience as their top REALTOR® must-haves. Virtual platforms simply cannot measure up in this regard. With that being said, preferences are subject to change over time. Industry professionals cannot let those working irresponsibly sabotage these sentiments as more alternative options present themselves moving forward.
What Does Real Estate Professionalism Look Like?
First, it starts by industry alignment on a new standard of REALTOR® professionalism that works to protect and benefit Canadian homebuyers and sellers. This should include industry regulations on the under-pricing of homes to eliminate overzealous bidding wars, as well as adding mandatory conditions to offers that make the purchase conditional on receiving legal approval. It means the creation of a national set of standards and ethics to operate as a REALTOR®, in order to help prospective clients better vet their credentials and professionalism. It means ensuring that buyers and sellers have the information, knowledge and necessary disclosures to both hire a reputable full-time professional REALTOR®, and by extension, engage in and complete Canadian real estate transactions that are within their means and levels of risk tolerance. Regulatory bodies in each province must put this on their agendas immediately to ensure that consumers are protected from unscrupulous activities within the industry.
Simply put, when we’re confronting one of the most profound and financially significant purchases of our lives, it’s paramount that the Canadian homebuyer and seller be in the ‘driver’s seat,’ both in perception and fact.
This column was written by Christopher Alexander, Chief Strategy Officer and Executive Vice President, RE/MAX of Ontario-Atlantic Canada and Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada