Is Your Real Estate Agent Double-Ending Your Deal?

Affordable housing is an issue that affects every Ontarian – and when Premier Kathleen Wynne unveiled last week’s 16-part whammy to cool the province’s market, everyone, from renters to big-name developers, was impacted in some way. Among the changes for foreign buyers, speculators and landlords, though, was a comment that has riled the real estate industry: that the provincial government would crack down on unethical realtor practices.

In a statement to the surrounding media, Wynne called for the modernization of agent-client representation rules, to improve offer transparency, and to scrutinize practices such as double-ended deals and fake bidding.

What are Double-Ended Deals?

These are real estate transactions where one agent represents both the buyer and seller and collects commission from each when the sale is made. They aren’t illegal, as long as all parties agree to it in writing, and they’re fairly commonplace. However, argues Zoocasa CEO Lauren Haw, even above-board instances of double-ending are a disservice to the seller, who would almost always benefit from higher offers in the hot open market. She says the province needs to go all-in on cracking down on the practice.

“Agents – including those that are on the same team – who have any monetary connection to the sale whatsoever should not be able to represent both the buyer and seller of a property, ever. Anything less than a blanket restriction on multiple representation is not enough,” she says.

“The moral issue is that the practice is in the worst interest of the seller… anyone working in the best interest of their sellers would put the home on the open market.”

Keeping Up with the Competition

While the perception may be that agents are looking to cash in on rising Toronto real estate prices, Haw says double-ending is actually the result of an overcrowded workforce, pointing to the active 52,000 realtors in the GTA – that’s more than doubled over a decade.

“These issues have grown more prevalent mainly due to the number of agents, not price points. There is a supply and demand issue among agents – as a result, they’re trying to make more per home since there are less sales per agent,” she says. “The agent coaxes the seller into going with their buyer without fully marketing the property to other agents, or by cooling demand to ensure their buyers’ offer is the highest.”

A recent CityNews article reveals some agents are so desperate for business they make elaborate promises to win buyer business – think a night out on the town, a cut of the commission, or even a trip to Disney World.

When Agents Don’t Disclose Double-Ending

However, in some instances, unscrupulous agents may not disclose that they’re representing all sides of the deal – and that’s a breach of REBBA 2002, the Real Estate Council of Ontario’s legislative code of ethics binding all real estate professionals.

Such dubious methods came to public light last November, when undercover journalists working for CBC’s Marketplace caught six agents in the act. Hidden camera footage taken at various open houses reveal the agents promising the use of “insider information” to control offers. In some cases the reporters, who were posing as prospective buyers, were guaranteed the purchase of the home in exchange for signing on as buyer clients. 

Is Your Real Estate Agent Double Ending Your Deal?

Haw says there are a few tell-tale signs sellers should heed that may signal their agent is attempting to double-end the deal without their knowledge:

Poor photography: Having bad or non-existent photos on the home’s MLS listing limits viewing bookings and online traffic, making open house walk-ins the only way to market the home. Less interest garnered up front makes it easier for an agent to position a buyer client of their choice.

Lack of communication with other agents: A listing agent should always be openly collaborative and forthcoming with buyer agents, and willing to provide them with whatever information they need to formulate an offer. An agent who doesn’t return phone calls or is hesitant to provide info may be trying to dissuade growing interest in the property.

Limiting multiple rounds on offer night: Encouraging multiple rounds of offers, and giving buyers the opportunity to improve theirs, is always of benefit to the seller. Be wary of an agent who pushes for “one-and-one” without giving prospective buyers a chance counter, and who waits until the very end of offer night to produce an offer based on “perfect information”.

Not revealing their involvement to other agents: When there are multiple interested buyers most agents will put forth a competitive offer – but they’re less inclined to do so if they think they’re the only ones in the game. Keeping their stake a secret gives the double agent the chance to make an offer without engaging the other in competition.

About Penelope Graham

Penelope Graham is the Managing Editor at Zoocasa, and has over a decade of experience covering real estate, mortgage, and personal finance topics. Her commentary on the housing market is frequently featured on both national and local media outlets including BNN Bloomberg, CBC, The Toronto Star, National Post, and The Huffington Post. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods, travelling abroad, or in the dance studio.

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