Posted by: Nick Fundytus

Question of the week:

How does TRESA change things for Buyers and Sellers after December 1st?

Hey u/Mountain_Cartoonist9,

I work on the Buyer and Listing Side (mostly the listing side) and there are some key changes happening on December 1st in Ontario. It’s due to TRESA (the Trust in Real Estate Services Act) replacing the Real Estate Business and Brokers Act of 2002. RECO (Real Estate Council of Ontario) has a summary page for members and the public here.

Key changes include:

  • A party to a trade (Buyer, Seller, Landlord or Tenant) can be either a client of a brokerage or an unrepresented party. A brokerage has fiduciary responsibilities to their clients, but cannot provide any expertise or opinions to a self-represented party. Formerly, there was an in-between state called a customer, but that designation ceases to exist. This is what the listing Realtor you spoke to is likely referring to, and that you can no longer be a customer. After the Act comes into effect, you’re either a client of the brokerage, or they become extremely limited in how they can serve you as an self-represented party.

  • Sellers may choose (unilaterally) to share the contents (partially or in whole) of offers they’ve received with Buyers. This is a significant change but I doubt we’ll see it actually occur much except in very specific situations where it benefits the Seller.

  • New disclosure documents. I would share links to these but some have not even been published in their final form as of today (November 15th).

  • Increased enforcement powers and tools for RECO to go after violations of this Act.

  • Revamped code of ethics, particularly around conflicts of interest and confidentiality.

I hear what you’re saying about feeling like you’re weren’t getting much value from your previous Realtor, and here are my (obviously biased) thoughts:

  • Cottages are a very different breed of property than a typical residential home, and frankly most agents struggle with these if it’s not their focus and area of expertise. I don’t touch them (I have a colleague who I refer clients to for our local cottage country) because I understand that there’s a lot of difference from lake to lake or even bay to bay within the same lake, and variations in price caused by well and water rights, easements and things that aren’t going to be immediately apparent or even easily available to a layperson. You may feel that you have a good handle on pricing because you’ve been watching the market in your target area for a while, but it’s easy to miss something that costs you more money than you might save by whittling down commission slightly as a self-represented party.

  • On the direct subject of commission (and this isn’t meant to be confrontational, just explanatory), keep in mind that total commission is set out between the Listing Brokerage and the Seller in the Listing Agreement, who are the only parties to that document. Although the Listing Realtor and the Seller may have written provisions for a discount when approached by a self-represented party (you, potentially), the Listing Realtor is in no way obligated to disclose this to you or communicate your desire for a commission discount to the Seller, since that’s not an agreement that you’re party to. Yes, as the person buying the property you’re obviously paying that commission (in a manner of speaking), but it was set out before you arrived and you have no legal standing to alter the commission. I get that this is frustrating for many buyers and I understand why.

  • On the flip side of the bad Realtor, a knowledgeable Realtor can be a great asset for cottage purchases in particular. Find one who owns a cottage in the area, has their office in the area and hopefully grew up in the area, as they’ll have a lot of local knowledge on factors and trends that could affect your purchase, and can help you avoid potential problems. I’m not sure what cottages go for in your target area, but my guess is that a strong Realtor could probably save you more in negotiation, legwork and headache than you’d be saving on commission going it alone.

Good luck on the search. I hope that you find a great cottage!

Source: I’m a Realtor in Ottawa, Ontario.

Nick Answers Reddit

Every week, Nick answers a Redditor’s question about buying, selling, renting, investing or living in Ottawa. This week’s question is about whether it’s okay to dump a Realtor that’s not getting the job done in a Redditor’s purchase search.

Nick's Response

Hey u/Mountain_Cartoonist9,

 

I work on the Buyer and Listing Side (mostly the listing side) and there are some key changes happening on December 1st in Ontario. It’s due to TRESA (the Trust in Real Estate Services Act) replacing the Real Estate Business and Brokers Act of 2002. RECO (Real Estate Council of Ontario) has a summary page for members and the public here.

 

Key changes include:

  • A party to a trade (Buyer, Seller, Landlord or Tenant) can be either a client of a brokerage or an unrepresented party. A brokerage has fiduciary responsibilities to their clients, but cannot provide any expertise or opinions to a self-represented party. Formerly, there was an in-between state called a customer, but that designation ceases to exist. This is what the listing Realtor you spoke to is likely referring to, and that you can no longer be a customer. After the Act comes into effect, you’re either a client of the brokerage, or they become extremely limited in how they can serve you as an self-represented party.

  • Sellers may choose (unilaterally) to share the contents (partially or in whole) of offers they’ve received with Buyers. This is a significant change but I doubt we’ll see it actually occur much except in very specific situations where it benefits the Seller.

  • New disclosure documents. I would share links to these but some have not even been published in their final form as of today (November 15th).

  • Increased enforcement powers and tools for RECO to go after violations of this Act.

  • Revamped code of ethics, particularly around conflicts of interest and confidentiality.

I hear what you’re saying about feeling like you’re weren’t getting much value from your previous Realtor, and here are my (obviously biased) thoughts:

  • Cottages are a very different breed of property than a typical residential home, and frankly most agents struggle with these if it’s not their focus and area of expertise. I don’t touch them (I have a colleague who I refer clients to for our local cottage country) because I understand that there’s a lot of difference from lake to lake or even bay to bay within the same lake, and variations in price caused by well and water rights, easements and things that aren’t going to be immediately apparent or even easily available to a layperson. You may feel that you have a good handle on pricing because you’ve been watching the market in your target area for a while, but it’s easy to miss something that costs you more money than you might save by whittling down commission slightly as a self-represented party.

  • On the direct subject of commission (and this isn’t meant to be confrontational, just explanatory), keep in mind that total commission is set out between the Listing Brokerage and the Seller in the Listing Agreement, who are the only parties to that document. Although the Listing Realtor and the Seller may have written provisions for a discount when approached by a self-represented party (you, potentially), the Listing Realtor is in no way obligated to disclose this to you or communicate your desire for a commission discount to the Seller, since that’s not an agreement that you’re party to. Yes, as the person buying the property you’re obviously paying that commission (in a manner of speaking), but it was set out before you arrived and you have no legal standing to alter the commission. I get that this is frustrating for many buyers and I understand why.

  • On the flip side of the bad Realtor, a knowledgeable Realtor can be a great asset for cottage purchases in particular. Find one who owns a cottage in the area, has their office in the area and hopefully grew up in the area, as they’ll have a lot of local knowledge on factors and trends that could affect your purchase, and can help you avoid potential problems. I’m not sure what cottages go for in your target area, but my guess is that a strong Realtor could probably save you more in negotiation, legwork and headache than you’d be saving on commission going it alone.

Good luck on the search. I hope that you find a great cottage!

Source: I’m a Realtor in Ottawa, Ontario.

3 Bonus Tips for Selecting a Buyer’s Agent:

1

Get a referral from friends or family to someone with relevant experience. If you’re a first-time homebuyer, for example, ask your friends who bought their first home.

2

If in doubt, interview three. Most people go with the first agent they meet, but not all Realtors are created equal.

3

Take your Realtor for a test drive. Ask to see a home that you’re interested in before committing to Buyer Representation paperwork.

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