This text is part of the special section The great builders
Should we abolish blind auctions of properties? Or, change the remuneration of brokers? Several spoke out on the supervision of real estate brokerage during a public consultation with the Quebec Ministry of Finance intended to raise possible solutions to the real estate overheating in the province.
They are 65 and 70 years old. To move and retire in their native region, they sold their home in 2020, planning to buy another very quickly. The couple then have to deal with the overbidding of properties as well as the 15-minute visits to houses that have a lot of problems and are overpriced. The couple described, in a testimony sent to the ministry and available online, being in shock and almost in depression because of the uncertainties about their future.
This couple is not the only one to have suffered the effects of the real estate overheating, which reached new heights with the COVID-19 pandemic. In a context of housing shortage, several tenants of buildings are also penalized by overheating, sellers trying to empty their building in order to sell it at a high price. Some brokers are exhausted by the volatility of the market. How to brake the wheel? Several factors are singled out, such as the increase in sales in a context of a pandemic or the glaring shortage of housing. After being questioned about the possible role of real estate brokerage in overheating, the ministry wonders if the framework for the practice should be adjusted.
What to change?
“We would like the ministry to be able to reflect on the fact that a real estate broker can, during the same transaction, represent the buyer as well as the seller”, observes the Association des courtiers hypothaires du Québec, at the like many organizations that responded to the ministry’s call. “The appearances of conflict of interest and impartiality are strongly implicated in these types of transactions. Quebec is one of the few places in America that tolerates this kind of practice. “
Likewise, some are voting for a cap on broker compensation. “Most brokers are paid on a commission basis when the transaction is closed. This means that they have a pecuniary interest in the transaction being concluded quickly and for a high amount, ”writes the Consumers Association for Quality in Construction (ACQC).
A real estate broker can, during the same transaction, represent the buyer as well as the seller […] Quebec is one of the few places in America that tolerates this kind of practice.
For the lawyer and trainer in real estate law Isabelle Sirois, brokers are subject to a strict code of ethics and have adequate practices. “In my opinion, if any improvement needs to be made, it comes under more rigorous control by the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ), she writes. The announcement of increased monitoring of brokerage practices would be very favorably received by a large majority of brokers. The public’s opinion of real estate brokers would be all the better. “
Offers, loans and inspections
“We are seeing an increase in the number of situations where the building is sold without a pre-purchase inspection and without any legal warranty,” observe members of Mortgage Professionals Canada. The association recommends making the inclusion, in the promise to purchase, of a deadline for obtaining mortgage financing. According to the Corporation of Property Quality Inspectors, the inspection should be done before marketing and be required by owners.
In the dark, a buyer may be tempted to make an offer to purchase the amount of which is significantly greater than the value of the house or even other promises to purchase. To pay off his heavy mortgage, the new owner can then consider increasing the rent of tenants, a trend which contributes, one sale at a time, to the real estate overheating. To counter this phenomenon, simultaneous promises to purchase should be communicated in a transparent manner, believe the ACQC and the solidarity deputy Andrés Fontecilla. Others oppose this approach, believing that the disclosure could prompt buyers to place new, minimally superior bids, which would create an auction on the affected property.
A swing back?
“In all fairness, as a broker, I am overwhelmed by the current market. This market is neither pleasant for brokers nor for buyers ”, testifies Véronique Babin, who believes that the market will stabilize naturally. “Selling deadlines are stretched by a few days each month, multiple offers have dropped from 15 to 3 per property, prices are slowly stabilizing, price cuts are back, work that resumes in the offices makes it less urgent. the need to move. “