For many Quebecers, $50,000 is the salary for an entire year of work. For real estate brokers, this sum can easily represent the commission of a single sale since $1 million properties are not uncommon.
The amount is not paid directly into the pockets of a single broker. It is generally shared between two brokers who must pay certain fees. But in any case, the commission – taxable – is paid by a single person, the one who sold his property. It’s a colossal bill. In general, brokers receive 4 to 7% of the final sale price, with an average of 5%.
When you give a few tens of thousands of dollars to a broker for his services, you expect professional, impeccable, attentive service. We also have the right to demand the highest ethics. After all, his work is governed by the Real Estate Brokerage Act.
Looking back, I see that the year 2023 will have been particularly trying for brokers and their reputation. Some stars in the industry have tarnished the image of the profession. Embarrassing revelations concerning their questionable and sometimes even prohibited practices have accumulated, which would have amply deserved a column.
It is not for nothing that DuProprio occupies the first position in the ranking of Protect yourself on real estate services unveiled at the beginning of December.
More than 800 people who have recently bought or sold a property have noted the quality of the services received. No less than 84% of the clients of DuProprio, a company which supports those who prefer to do without the services of a broker, recommend its services.
Via Capitale comes second in the ranking, with a recommendation rate of 70%. This means that even the most popular agency did not obtain a stellar score. Customer complaints against their broker are diverse: pressure to hire a particular notary or building inspector, encouragement to improve the promise to purchase, encouragement to waive the inspection or even the guarantee legal.
Other worrying deviations have made the headlines.
The star broker of the Casa chain Christine Girouard and her partner Jonathan Dauphinais-Fortin are suspected of having hatched a bogus offer scheme to create artificial auctions discovered by my colleague Isabelle Dubé. Their licenses were revoked. And what about Brigitte Le Pailleur, a broker at the head of an agency who made a profit of $500,000 on the backs of her clients by purchasing their building at a low price? Thank goodness she was fined a historic $150,000, but the strategy is commonplace in the industry.
In Gatineau, broker Yassine Chentoufi was suspended after having made, in all likelihood, 11 fraudulent transactions which earned him $231,290. There is talk of nominees involved without their knowledge, forged signatures, false documents.
The story that discouraged me the most? This: barely 16 months after modifications to the Real Estate Brokerage Act to prohibit brokers from representing the buyer and the seller at the same time, the rules had to be changed again because brokers had found… a way to get around them. This is hardly edifying.
All this adds to the fact that the number of brokers targeted by an ethics investigation has tripled in 2022 compared to 2020. Breach of trust, false signatures, illegal price inflating operations… the Self-Regulatory Organization for Real Estate Brokerage of Quebec (OACIQ) has seen it all. This year, complaints are up another 20%.
You will tell me that we can find people who harm the credibility of their colleagues in all professions. It’s true. But in the case of real estate brokerage, the consequences of a lack of ethics can be major and cost a fortune. We’re talking about the most important purchase of a life.
The general public must be protected, which requires extreme rigor. However, self-regulation is clearly not enough.
The amount of fines should be increased so that it is consistent with the remuneration of brokers. Penalties of $3,000 will never deter harmful behavior. We should also improve the training of brokers. It is not particularly long considering the importance of the transactions concluded.
Let’s also think about ways to increase transparency. One example among others: the broker who represents a seller can easily claim that he has received a handful of purchase offers to increase the bids even if this is not the case. Unable to verify, documents are not accessible.
As for the remuneration of brokers, it is time to find a more appropriate formula. The median sales price of single-family homes in Montreal has jumped 53% over the past three years, which has propelled commissions to record highs. However, the work of brokers has not increased by 53%.
At least we felt that the OACIQ was taking its mandate more seriously. Permits were promptly revoked. Attempts were made to better communicate with the public and the media, two groups who often questioned his competence and true interests. But there is still a long way to go to ensure that requests for information are processed within an acceptable time frame. The OACIQ must continue to improve its credibility so that Quebecers can conclude real estate transactions with complete confidence.