New rules for real estate fees

Public Advisory Published by the
Real Estate Council of Ontario

The rules for real estate fees have changed: what home buyers and sellers need to know

December 13, 2013 (TORONTO) – The Government of Ontario has changed the rules to give consumers and real estate brokerages more options and flexibility regarding how real estate services are paid for.

What has changed

Previously, real estate brokerages could charge consumers a flat fee or a percentage of the sale price, but not a combination of the two. The restriction has been removed, so brokerages now have the option to make fee arrangements that could include a blend of a flat fee and a percentage of the sale price.

These changes, brought in by the Stronger Protection for Ontario Consumers Act, 2013, are effective as of December 12, 2013.

What it means

With greater flexibility in how to charge for their services, real estate brokerages now have more options to differentiate their business from their competitors. How this will play out in the marketplace remains to be seen, but the bottom line is that competition and market forces can now play a greater role in how real estate service fees are structured.

While choice and flexibility are good for consumers, it remains crucial for home buyers and sellers to educate themselves, and to understand what services their brokerage will provide and how they are priced.

Home buyers and sellers have a wealth of choices when they choose a real estate professional. They should consider their options and ensure the person they choose will provide the services they’ll need with a price structure they can work with. Prices and service levels are negotiable, and communicating clearly ahead of time and getting everything in writing can help avoid problems later on.

About RECO:

RECO regulates the real estate profession in Ontario. RECO is responsible for administering the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated regulations on behalf of the provincial government. In order to trade in real estate in Ontario, brokers and salespersons must be registered under REBBA 2002. RECO’s mission is excellence in the delivery of regulatory services that protect the public interest and enhance consumer confidence in the real estate profession. For more information, visit www.reco.on.ca.

December 14, 2013 in Real Estate Practices, Real Estate Regulations, Toronto Real Estate Board | Permalink | Comments (0) | TrackBack

Personal information now mandatory

Realtors required to confirm the buyer's ID.

Canadian realtors are bracing for a customer backlash starting today, as they become foot soldiers in the battle against money-laundering. Federal regulations that kick in today will force realtors to start asking property sellers and buyers personal information never before required.

In Ontario alone, 47,000 realtors will be expected to fall in line or face stiff penalties. "We know there is going to be consumer rejection on this and we are just following the law," said Gerry Weir, a London realtor and president of the Ontario Real Estate Association (OREA).

Realtors will be required to ask for the name, address, date of birth and occupation of property buyers and sellers, plus ID such as a driver's licence or passport.

Weir said Ottawa has made little effort to educate people about the changes, and realtors feel they're being forced into an uncomfortable enforcement role. He said realtors will have to keep the information for seven years and submit it on request to the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC), a federal agency set up to track suspicious transactions that could be related to money-laundering or terrorism.

If the buyer is foreign or from another part of Canada, the real estate broker will be required to hire an agent in the buyer's community who can confirm the buyer's ID.

If a client refuses to disclose the information, Weir said, a realtor would have to walk away from the deal or report the person to FINTRAC.

"Even if I have known you for 30 years, I still have to ask for that information," he said.

Weir said it could get even worse.

He said Ottawa also wanted to require a receipt-of-funds record, with information on anyone who actually supplied money for sales, including relatives or friends.

Weir said the government backed down on that, but he expects it will only be temporary.

"That is the next step; that will happen," he said.

FINTRAC officials appear confused about the new rules.

Spokesperson Peter Lamey at first said one piece of ID was needed from buyers and sellers, and information such as date of birth and occupation wouldn't be required.

He later said the information wouldn't only be required from buyers and sellers, but also from anyone who contributed money to a deal as part of the receipt of funds record, contradicting Weir's belief that Ottawa had backed down on that provision.

Negotiations on the rules were handled by the federal Finance Department and not FINTRAC, Lamey said.

For years, realtors have been required to report any suspicious financial transactions to FINTRAC, especially those involving cash payments of more than $10,000. Weir said he's reported three transactions in recent years, and two involved someone trying to buying a house to set up a marijuana growing operation. Still, he said only a very small number of real estate transaction are suspicious.

Weir said the government will only do spot inspections during the next six months to ensure realtors and brokers are meeting the requirements.

After that, any realtor or broker who doesn't meet the requirements could face hefty fines or jail time. Weir said the OREA wants to educate people about the changes, but there've been long negotiations with the government and the rules weren't firmed up until last week.

June 23, 2008 in Real Estate Regulations | Permalink | Comments (8) | TrackBack

Ontario's Real Estate Regulation

The approaching height of summer brings a busy time for Ontario's real estate market. Ontario is providing information and resources to help protect all consumers when buying or selling a home. When buying or selling real estate property, being aware of all the 'do's and don't's' can help make an increasingly complex transaction less challenging.

Amongst the several things Ontarians should be aware of when buying or selling a property, include:

To help stay informed of what to know before purchasing or selling property, a good source of information is the Real Estate Council of Ontario. RECO has a dedicated Consumer Information section that provides helpful information about mortgage fraud, title fraud, marijuana grow houses and much more.

"Buying or selling a home is an important, emotional milestone in our lives. Real estate transactions have become increasingly complex, so we encourage all Ontario consumers to get the facts and protect themselves in any real estate transaction," said Ted McMeekin, Minister of Government and Consumer Services.

Before signing a representation agreement with your real estate broker or sales person, make sure you know how long the agreement will be in effect. RECO is responsible for regulating trade in real estate, in the public interest, on behalf of the Ministry of Government and Consumer Services.

Before you begin working with a real estate broker or salesperson, you should use the Real Estate Council of Ontario's (RECO) online search feature to confirm if he or she is registered.

The information available includes the registration status, the current expiry date of registration and regulatory activities related to the brokerage, broker or salesperson.

RECO's website, at www.reco.on.ca, includes a dedicated Consumer Information section, which provides consumer-focused information about mortgage fraud, title fraud, marijuana grow houses and much more.

If you have a general question or concern about the conduct of a broker or salesperson, you may contact the Office of the Registrar at 416-207-4800 or 1-800-245-6910.

June 2, 2008 in Real Estate Regulations | Permalink | Comments (6) | TrackBack

Competition Bureau recommends:

Canada's self-regulated professions, which includes real estate brokerage, should re-examine their rules to ensure they serve a public good and do not go too far in restricting competition, a Competition Bureau study says. The Bureau's study, released today, found that rules that limit advertising, set prices for services and restrict who can offer services may go further than necessary to protect the public interest. Further, these rules can lead to higher prices, limit choice and restrict access to the type of information consumers need to make decisions.

"We understand that regulation plays a legitimate role in protecting consumers and meeting public policy goals," said Sheridan Scott, Commissioner of Competition. "However, not all the regulations we looked at appear necessary, and removing some of these restrictions could benefit consumers and the Canadian economy."

One of the findings: Consumers generally pay less for services when professionals compete on price. In real estate, Ontario legislation limits price competition. The Bureau recommends clients be able to choose the real estate services they want from a menu of offerings. Specifically, Ontario legislation dictates consumers pay either a flat fee or a percentage of the selling price. The Bureau recommends real estate regulators remove this restriction.

See more here »

December 11, 2007 in Real Estate Regulations | Permalink | Comments (0) | TrackBack

Maureen's "phantom" phantom bids

The secret's out. "It's one of the oldest tricks in the book."

The incoming head of the Toronto Real Estate Board has come out swinging against phantom bidding tactics after denying they even existed when she ran for the job three months ago. "It's dirty realty, it really is," Maureen O'Neill said of agents who fabricate offers during bidding wars. She is now calling on the Real Estate Council of Ontario (RECO) to yank the licences of agents convicted of using phony bids.

O'Neill made her comments after learning that the Toronto Star had received documents proving the Real Estate Council of Ontario has been called upon to deal with complaints about bidding war tactics. Until this week, she steadfastly refused to acknowledge made-up bids occur, saying the Ontario council's CEO Tom Wright and registrar Allan Johnson assured the Toronto Real Estate Board's directors on July 19 that no complaints had ever been received.

But the Ontario council's spokesperson Sandra Gibney said Friday that Wright and Johnson made no such statements and that "RECO does not know why Maureen O'Neill is claiming otherwise." Ms. Gibney added in an emailed statement, "If Ms. O'Neill had contacted RECO prior to responding to questions about RECO's complaints statistics, RECO would have provided the same information that you (the Toronto Star) received".

Read more about "phantom bids" in the Toronto Star, here and here ...

September 16, 2007 in Real Estate Regulations | Permalink | Comments (0) | TrackBack

Toronto's new taxes still in question

Vote on new taxes expected to be tight after heavy lobbying

Mayor Miller's plan to impose two new taxes is expected to face a tight vote at Toronto city council next month, as lobbyists fighting the levies make last-ditch efforts at city hall. Saying Toronto needs new sources of revenue to deal with its budget shortfall, Mr. Miller and his executive committee this week endorsed two new taxes: a 2% tax on land purchases and a $60 fee on motor-vehicle registrations.

The levies, made possible with new powers granted to the city by Queen's Park, would come on top of provincial taxes already paid on these transactions. Both the Toronto Real Estate Board and the Canadian Automobile Association have been meeting with city councillors to attack the new taxes, as have other lobbyists.

With the mayor's core conservative critics set to vote against the new taxes, and a list of left-leaning supporters expected to support him on a crucial vote, one lobbyist says he is focusing on council's political centre as the July meeting approaches.

"There's the mushy middle, which we've obviously been trying to go after," said Von Palmer, the Toronto Real Estate Board's government-relations director, who estimated he had met with half of the 44-member council.

"...The question is, can you get enough of those people to make a difference?"

Councillor Denzil Minnan-Wong, a vocal conservative critic of Mr. Miller who opposes the new taxes, says the real lobbying is coming from the mayor and his office.

June 27, 2007 in Real Estate Regulations | Permalink | Comments (2) | TrackBack

Toronto market is hot ... and shady

Dissident campaigns to head Toronto Real Estate Board

Michael Manley is an honest broker who cares about transparency and integrity in the real estate brokerage business. Is he about to be crushed by the Great Real Estate Cartel? A revealing article about problems in the Toronro real estate marketplace appears in today's Toronto Star.

In part it says:

"There's definitely a culture of greed that you didn't really see 10 years ago," says Michael Manley, from his office at the Prudential Properties brokerage he owns in the Beach.

He says he's heard enough stories about agents stretching and breaking the laws governing the industry. He wants transparency, including an open online bidding system to stop unfair practices when multiples offers on a property come in.

That's what he's promising if voted in as president-elect of the Toronto Real Estate Board. The weeklong election began last Friday, with 25,500 agents able to vote.

Manley's only opponent, Maureen O'Neill, counters that the system works. "I am completely opposed to Mr. Manley's platform. I believe the current market with the multiple offers is simply a supply and demand situation. It's proven it's successful, it works, it's excellent."

Asked about unethical practices, O'Neill replied that, "we have a mechanism within the industry, through RECO (the Real Estate Council of Ontario) to look into that. It's simply not a problem.

"I'm not disputing that that can happen," she explained.

Manley says without a transparent offer system, listing agents control all the information in multiple offer situations. For example, this makes it almost impossible to verify if competing offers are actually registered or if agents are divulging offers to their own clients, letting them know what to bid by doing so.

See full article in the Toronto Star »

June 13, 2007 in Real Estate Regulations | Permalink | Comments (1) | TrackBack

Competition Bureau investigates MLS

The federal Competition Bureau is investigating whether recent moves to limit access to the Multiple Listing Service (MLS) are anti-competitive."I can confirm that the Competition Bureau is opening an inquiry into whether the MLS rules are raising competition concerns under the Competition Act," bureau spokesperson Marylyne Nahum said Monday.

The Competition Bureau says the MLS system is used in 90 per cent of Canadian real estate transactions. The formal inquiry is targeting the possible violation of the act's provisions dealing with conspiracy and the "abuse of dominant position." The Canadian Real Estate Association (CREA) said Monday its current MLS policies and new interpretations comply with current competition and trademark law.

"Members of the Canadian Real Estate Association, which owns the MLS trademark, have passed seven interpretations designed to clarify how existing MLS rules are applied," said association spokesman Bob Linney. "The interpretations deal with requirements for anyone wanting to use the MLS trademark."

In the past, discount brokers have charged that CREA has been trying to squeeze out the discounters, who do most of their business online. CREA says it merely wants to protect the association’s MLS trademark.

The Competition Bureau said it has obtained a court order that requires the real estate association to produce documents relating to its MLS rules. In an affidavit, the bureau said information from the industry indicated that about 90 per cent of residential real estate transactions in Canada involve the MLS database.

Last November, Realtysellers Ltd. suspended operations, "pending resolution" of the MLS trademark dispute. The Toronto-based company gave rebates to buyers and sellers who used its services. It also advertised a $695 listing fee for private sellers who want their home on the MLS.

March 26, 2007 in Real Estate Regulations | Permalink | Comments (1) | TrackBack

What is RECO?

The Real Estate Council of Ontario (RECO) is responsible for administering the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated regulations on behalf of the Ontario Ministry of Government Services. RECO regulates the activity of trade in real estate in the public interest for the province of Ontario

In order to trade in real estate in the province of Ontario you must be registered, or exempt from registration, under REBBA 2002. Currently, there are more than 3,800 registered real estate brokerages and more than 44,000 registered real estate brokers and salespersons in Ontario.

Only those brokerages, brokers and salespersons that have met the requirements for registration and hold a valid certificate of registration issued by RECO may trade in real estate in Ontario and hold themselves out as a “real estate brokerage”, “real estate broker” or “real estate salesperson”.

February 27, 2007 in Real Estate Regulations | Permalink | Comments (0) | TrackBack

Montreal mayor wants more tax

Montreal's mayor says his city is struggling financially and needs to be allowed to collect new taxes. Mayor Gérald Tremblay said Thursday that he's asking the province of Quebec for more "administrative and fiscal responsibilities."

This would mean he could tax items like parking, real estate transactions or entertainment events.

He is looking for a deal similar to the one Toronto secured in June 2006, when the Ontario government passed a law allowing Toronto to institute municipal taxes on alcohol served in bars and restaurants.

The law also allows Toronto to collect on movie and concert tickets. The Ontario law went into effect January 1.

Tremblay said he plans to meet with Quebec Premier, Jean Charest, soon.

January 20, 2007 in Real Estate Regulations | Permalink | Comments (0) | TrackBack

 

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