By MPP Toby Barrett
Buying a home is often the largest and most stressful purchase we make. Negotiating a mortgage, fear of losing the house you wish to purchase, commissions and location, all weigh heavily on people’s minds when deciding to move.
During the last session at Queen’s Park, Bill 55 — Stronger Protection for Ontarian Consumers Act, 2013 — was introduced. This is a bill designed to end the tactic of high pressure sales in three key areas: water heater rentals, debt consolidation and real estate.
Nearly all of Ontario’s real estate agents are professionals who follow the Code of Ethics set out by the Ontario Real Estate Association (OREA). Those agents who do not adhere to the Code of Ethics face disciplinary action including fines up to $25,000 and the revocation of their license.
However, for the past 10 years people in Ontario have waited for legislated measures to protect them from the few unscrupulous real estate agents who use the practice of phantom offers as a sales tactic.
Phantom bids are jigged by the agents themselves and there’s no certainty of the nature of the offers coming in. Both buyers and sellers rely on accurate information and these kinds of high pressure tactics distort the market and jack up the price.
Inflated prices mean bigger mortgages, which mean more household debt and higher default rates. Ultimately, it diminishes trust in our real estate industry, especially when a consumer finds out they’ve been scammed by an inflated-price phantom offer.
If we are to tackle phantom offers, it should be established up front in the offer document with a clear paper trail outlining the existence of other offers. This would help prevent accusations of a consumer making false claims should there be a complaint sent into the Real Estate Council.
Further, Bill 55 will mandate offers for a property be made in writing. Consumers may inquire with the Real Estate Council of Ontario as to whether other offers were made on that same property.
Currently Ontario is the last province in Canada to restrict custom charges in real estate, something Bill 55 will also change. The legislation will address these restrictions by allowing buyers and sellers to negotiate a balance of commissions and fees. This practice gives both parties more choice and will likely lead to better outcomes for both. Allowing a combination of fees and commissions to be charged on a real-estate transaction will allow agents to compete more freely and bring Ontario in line with the rest of Canada.
Although Bill 55 has all party support, my colleagues and I want to see a full cost-disclosure provision added. It is an amendment we will propose, so upon signing the contract the agent will know the approximate amount of the transaction which will in turn be relayed to the seller.
There are also concerns that the bill will violate the privacy rights of buyers who will now be required to leave copies of their offers in the hands of the brokerage acting on behalf of the seller. Again this is an issue we in the Opposition will bring up as the legislation moves forward.
I look forward to this bill going to Committee where we can work to ensure the legislation provides real change and protection rather than just more regulatory red tape.