Ethics Corner: Yes, you must cancel that appointment – here’s why

Have you had buyers who, when sitting in front of a listed property, decided they no longer wished to see the home? Or have you been running late with your buyers, so you need to cancel a showing? When that happens, do you contact the listing brokerage to cancel?

Your answer to that should be an emphatic “Yes!”. If your answer was “No”, or you aren’t sure, take a look at what happened in a Professional Standards complaint heard at RAHB. This is an actual case.

A salesperson, “Bob” (not the actual salesperson’s real name), contacted a Listing Brokerage to make an appointment to view their listed property. When Bob and his buyers arrived at the property, the buyers decided they didn’t like the location and didn’t want to even look inside the house, so they moved on to the next house. Bob did not contact the Listing Brokerage or the seller to say they wouldn’t be keeping the appointment.

The sellers were extremely upset, as they had tidied up and taken three young children and two dogs out of the house for the appointed time, and then Bob and his buyers didn’t view the house and didn’t have the courtesy to cancel the appointment. The Sellers told their Listing Salesperson they were disappointed and frustrated, and they thought Bob lacked professionalism because he failed to cancel the appointment.

The Listing Salesperson filed a complaint about Bob with RAHB’s Professional Standards Committee. The complaint was based on RAHB’s MLS® Rules and Regulations, Section 8 – Selling Procedures, Sub-section 8.04 that says:

If a Member is unable to keep an appointment, the Member shall:
i. Where the appointment was made directly with the Listing Brokerage, advise the Listing Brokerage, or if direct contact with the  Listing Brokerage is not possible, advise  the Seller directly, or
ii. Where the appointment was made directly  with the Seller as permitted under these Rules, advise the Seller directly.

After going through the Professional Standards/Discipline process, Bob was ultimately required to pay a fine of $500 and hearing fee costs of $250.

SUMMING UP: you are responsible for notifying the Listing Brokerage or seller if you aren’t keeping an appointment. Not cancelling an appointment is considered unprofessional by consumers and other members alike, it shows a lack of respect of the seller’s time and efforts, and it is a breach of RAHB’s MLS® Rules and Regulations.


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Ethics Corner: Are your open house and directional signs legal?

Signs

Did you know that your signs must comply with all municipal sign bylaws?

MLS® Rules & Regulations, MLS® Rules & Regulations, Section 10 – Advertising 10.03 Signs giving notice of sale, rent, lease, development, exchange or open house… may only be erected on locations that  conform with Municipal and Provincial  sign legislation, all applicable laws,  regulations, codes and bylaws.…

You must abide by the sign bylaws of the municipality/region in which your listed property is located:You must abide by the sign bylaws of the municipality/region in which your listed property is located:

Burlington – By-law No. 034-2007 http://bit.ly/29LT5Ik  (Click on “Download Original  By-law” – see especially page 19)

Grimsby – By-law No. 97-45 http://bit.ly/2a8QpnJ

Haldimand – By-law No. 1064/10 http://bit.ly/29TBZWw (references throughout  the document)

Hamilton – By-Law No. 10-197 http://bit.ly/29LLSIg  (see especially page 27)

Why is it important?

Open house/directional sign bylaws exist to ensure that sight lines for drivers and pedestrians are unobstructed and, in some cases, so that signs are not left to clutter boulevards, medians, etc.

If your signs do not comply with municipal sign bylaws, they may be seen as causing a visual distraction, adding to what may be perceived as unsightly clutter, and as lacking professionalism.

Consequences

  1. Municipalities have fines for removing and storing signs that don’t comply with their bylaws.
  2. A complaint may be filed with RAHB’s Professional Standards Committee.

If you see a sign that doesn’t comply with municipal bylaws, you can:

  • Contact the owner of the sign and remind him or her of the sign bylaw for that municipality
  • Contact the municipality in which the sign is  located and let them deal with it as a non- compliant sign
  • Take a time- and date-stamped photo clearly showing the location of the sign and forward it  to the RAHB Professional Standards Committee (c/o Angela at the RAHB office – angelam@rahb.ca)  along with a letter of complaint that cites the bylaw that is being breached.

Note: RAHB cannot enforce the municipality’s sign bylaw; it can only enforce its rule requiring compliance with the bylaw. 

Be aware that bylaws differ from municipality to municipality, so what is non-compliant in Burlington, for example, may be compliant in Grimsby or Hamilton or Haldimand. If you see a sign that doesn’t comply with municipal bylaws, you should NEVER remove the sign – members may never interfere with another member’s sign.

Bully offers: know the rules

The RAHB Board of Directors recently approved a change to the MLS® Rules to address a very hot topic – pre-emptive offers, also known as bully offers.

So how do you properly prepare for a bully offer?

Step one: If you are suggesting holding offers until a particular day, or your seller wants to delay offers, you must discuss the pros and cons of this strategy with your client.

Step two: You receive clear direction from your client regarding how they would like to deal with bully offers. Using OREA Form #244, Seller’s Direction re: Property/Offers, make sure that your client has clarified how much information they want to receive if a bully offer comes in. Do they want to:

  • be notified of pre-emptive offers, without seeing details?
  • only consider offers that are above a certain price point?
  • consider all offers before the offer presentation date?
  • not be informed about any pre-emptive offers at all?

These particulars should be included in the REALTOR® Remarks field of the MLS® Listing.

OREA’s Form #244, Seller’s Direction re: Property/Offers is extremely important because as a REALTOR® you must act in strict accordance with the instructions that you are given. The law is clear: as a registrant, you must convey an offer to your client as soon as possible unless your client has given clear, detailed written direction to do otherwise.

Step three: Of course your client can still change their mind. However, you must make sure that you have a new written direction from your client via RAHB’s Amendment to Listing Agreement form.

Step four: Once you have a completed the Amendment to Listing Agreement form, you must do two more things before you can present a bully offer to your client:

a) update the property’s MLS® listing REALTOR® Remarks section to explain that offers are now being presented.

b) you must notify IN WRITING (text messages and emails are acceptable) anyone who has  expressed an interest in the property that offers are being accepted. This includes anyone who has booked a viewing appointment, has viewed the property, has informed you or your brokerage they are interested in submitting an offer, or anyone who has submitted an offer (or offer summary sheet) for the property.

With this clarification about who is considered to be an “interested party” and what is considered written notice, you will be able to deal with bully offers in a fair and transparent manner for the benefit of everyone.

As always, if you have any questions, please contact our MLS® Department at 905.667.4650 or mls@rahb.ca. Our staff will be happy to assist you.

Ethics

Disclosure – a quick Q & A

Q. If my brother lists his property through his good friend who also works in my brokerage, does the friend (who is the listing salesperson) have to provide a registrant’s statement?

A. Yes! Remember the listing agreement is with the brokerage and not the individual salesperson. Because you work for the same brokerage, you would be considered to be representing the seller, and so disclosure of your relationship is required.

 

Nine ways to show your professionalism

Being professional is good for your real estate business. But what about your colleagues? Here are nine steps to take so your colleagues will treat you as a fellow professional.

  1. Always use proper phone etiquette. Leave your full name, brokerage name, and return number when you call or page a fellow salesperson. Let them know a good time to call you back.
  2. Keep all phone messages short and to the point. Check your voice mail and email messages often during the day.
  3. Promptly return phone calls and emails from other salespeople. They may have an offer or need additional information to enable them to prepare an offer. Failure to return calls may be perceived as rude, and may also stand in the way of business getting done, possibly damaging your reputation and career.
  4. Keep your commitments. If you say that you will call a colleague by a certain time, then call by that time.
  5. Call ahead if you will be late for any meeting. Let the listing salesperson know if your buyers have changed their minds and don’t want to see the property.
  6. Respect another salesperson’s privacy.
  7. Avoid making late night phone calls about things that can wait until morning.
  8. Don’t make “urgent” phone calls or leave “urgent” messages or emails unless the matter is truly urgent.
  9. Extend a courteous and positive attitude to the staff in your own office and at other brokerages.

 
These tips are excerpts from “A Mentoring Kit for New Salespeople”, produced by the OREA Real Estate College.

This content has been reproduced with permission from the Ontario Real Estate Association.

Ethics Corner – Some tips and cautions for a hot market

Soliciting business by email
RAHB has lately been hearing from members that their sellers have been receiving random emails from other members offering their services.

Please remember that under Canada’s Anti-Spam Legislation (CASL), you may not solicit business by sending emails to people who are not your clients if you do not have a previous relationship with them or do not have their consent to communicate with them.

Learn more about CASL guidelines in CREA’s flow chart at http://bit.ly/2m30YuP (via REALTOR Link®)

You can also find more detailed information about the CASL on CREA’s REALTOR Link® page – just go to REALTOR Link® > CREA > Resources and Compliance > Compliance Resources > Anti-Spam (CASL).

Offers in a hot market
It’s a hot market right now – with relatively few listings and high demand, members are reporting multiple offers in the double digits and prices being driven up as a result.

We have received a number of calls from frustrated RAHB members and buyers who report they have been in situations where the listing salesperson has either suggested a price for an offer – usually well above the listed price – or indicated their offer should be, for example, $10,000 higher than their original offer in order to be successful.

While it may appear the listing salesperson is being helpful, they are in fact disclosing information about offers already received for the property. To suggest an increase or a figure that should be offered discloses that there is already an offer that would be unsuccessful if the suggested amount was offered.

You are reminded that RAHB’s Rules and Regulations specifically state that members may not disclose any terms of any offer to anyone:

Section 12 – Trading Procedures, Sub-section 12.03
Under no circumstances may the terms of an Offer be disclosed to anyone other than the parties to the Offer or their authorized representatives. The Brokerage must not disclose these terms to its own salespeople, other Brokerages, or other prospects. An Offer is confidential document and must be treated as such.

Offering “helpful” advice about how much an offer needs to be to be successful is clearly contrary to the RAHB Rules and Regulations, and is unfair to the buyers whose offers should not be used as bargaining tools.

Ethics Corner – Are you guaranteeing a sale?  Be careful how you advertise!

This article has been reproduced with permission from the Ontario Real Estate Association. The full decision can be viewed on the website of the Real Estate Council of Ontario (RECO) at www.reco.on.ca.

The following decision from RECO Discipline and Appeal Hearings has been condensed. All individual and corporate names have been changed.

 

THE FACTS

Chris and Pat wanted to sell their property. They were working with Sam, a real estate salesperson with Green Grass Realty, who listed their property for sale at a list price of $409,980. The listing agreement featured two handwritten notations.

The first notation stated that if Green Grass Realty purchases the property, the deposit will be a certified cheque of $20,000. As well, it stated that if Green Grass purchases the property or if Sam finds a buyer, the total commission will be two per cent. The other handwritten note indicated that if the property is not sold in 30 days, Green Grass Realty would buy the property at the highest price offered by the market.

Each of these notes was initialed by Sam and the sellers. No other terms or conditions regarding the promise to buy the property were documented in the listing agreement, which was for a period of three months.

Just over a month later, Chris and Pat complained to RECO. They alleged that they listed with Sam because of the promise that if their house did not sell in 30 days, Sam or Green Grass Realty would purchase it. The sellers said that after the 30 days had passed, they asked Sam when they’d receive a deposit from him. After several inquiries, Sam offered to purchase the house for $350,000. Chris and Pat did not think this was a fair price, believing the market price to be between $405,000 and $429,000.

Chris and Pat provided RECO with copies of Sam’s printed ads, which stated, “if your property is not sold in 30 days, we will buy it!” This text was accompanied by an asterisk which indicated that certain conditions may apply, but no conditions were listed.

In Sam’s response to RECO, he said that he had explained to Chris and Pat that the market price would be agreed upon between himself and the sellers and set by offers received within the first 30 days of listing the property. Sam said that the house would continue to be listed on MLS® until the closing date, which was a total of three months. Sam said that if a more attractive offer came along, Chris and Pat would have the option of accepting it. In the event that a lower offer was accepted, Sam would compensate the difference between that offer and the amount he guaranteed, ensuring no loss for the sellers.

Sam said two offers were received on the house. Just over a month-and-a-half after listing the house, the first offer was signed back but rejected by the buyers. About a week later a second offer was received and was also signed back. However, before the second offer was finalized, the first buyers returned with a new offer of $409,000 which was accepted by Chris and Pat.

Sam acknowledged that he had failed to document the details of the guarantee in writing and failed to get Chris and Pat’s acknowledgement. Green Grass Realty adjusted its portion on the commission to a $1,000 flat fee.

 

THE FINDINGS

The RECO panel determined that Sam acted unprofessionally by failing to offer to purchase Chris and Pat’s house as indicated on the listing agreement and in Sam’s advertising. Sam also failed to put in writing, the terms, conditions and limitations of the guaranteed sale arrangements and failed to get the sellers’ acknowledgement in writing.

The panel ruled that Sam breached the following sections of the REBBA 2002 Code of Ethics: (3) Fairness, honesty, etc.; (4) Best interests; (5) Conscientious and competent service, etc.; (27 (1) (b) Written and legible agreements; (38) Error, misrepresentation, fraud etc.; and (39) Unprofessional conduct, etc.

 

THE PENALTY

Sam was fined $10,000 payable to RECO. The full decision can be viewed on the RECO web site at www.reco.on.ca   Look under “Complaints and Enforcement” and then under “Regulatory activities and decisions” and scroll down to “Discipline and appeals decisions.” Scroll down and click on “Search by year.” Select 2014 then “Search.” The case is dated 2014/11/27.

Ethics corner – financing conditions

The following article was written and published by Mark Weisleder, in his newsletter dated October 29, 2016.  Reprinted with permission.

Now that we have all the new mortgage rules, it is more important than ever before to include the financing condition in any offer or be otherwise prepared for the consequences.

1. Pre-approvals are no guarantee you will obtain your financing
Too many buyers are cavalier about submitting offers without a financing condition, especially during the pressure of a bidding war. You must understand that even with a pre-approval, the lender must be satisfied with its own appraisal. The foundation for most appraisals is what would a willing buyer pay a willing seller, WITHOUT pressure? In a bidding war, there is almost always pressure on the buyer. This is why the appraisal will likely be lower than what the buyer offered and the lender will offer you less money than you hoped for. The answer is always to have an extra 5-10% of the down payment in reserve to protect you. In a condominium purchase, if it is conditional upon review of a status certificate, use that time to also make sure your financing is in order.

2. Lenders can change their mind right up until the day of closing
Even if you are approved after you sign your agreement, the lender can still change their minds based on anything which they may learn before they advance funds. There are usually many conditions attached to any loan approval, such as verification of income, down payment, employment. Make sure you work with your mortgage broker to satisfy all of these conditions and requirements as soon as possible in the process. The worst words a lawyer can hear from a lender on the day of closing is “The file is in underwriting”. This typically means that someone else is reviewing the entire file because issues have arisen. In some cases this can result in the entire loan being cancelled, right on the day of closing. In our firm, since we receive and send funds via wire transfer, we are fortunately able to complete deals even when lenders are late transferring funds to our trust account.

3. Always know the net amount you will receive from your lender
Every mortgage commitment is different. Some may contain up-front fees for arranging the loan, appraisals, CMHC fees and PST, interest to the interest adjustment date. All of these fees are deducted right off the top, before the balance is sent to your lawyer on the day of closing. The bottom line is you must know the exact amount that will be sent to your lawyer on closing, to make sure you have enough to make up the rest of the down payment, land transfer tax and legal fees. At our firm we remind clients to send us their mortgage instructions early in the process so that we can get them the net amount they will need to complete the transaction in a timely manner.

4. Get it in writing if buyer wants no finance condition in the Agreement
If the buyer does go ahead and tell you to put the offer in without a finance condition, get these instructions in writing. It is not enough to write the finance condition in the offer and then have the buyer strike it out and initial it. It is better to use a separate form. OREA has form 127 which makes it clear that the buyer is confirming to the buyer brokerage that they understand the risks in making an offer without conditions.

________________________________________________________
Mark Weisleder
Email: mark@realestatelawyers.ca
Website: www.RealEstateLawyers.ca
Direct Line:416.702.2499
Toll Free Tel:1.855.466.3801

Ethics corner

An Ethics Q&A: Assistants – does a real estate license make a difference?

Q:  I have an unlicensed assistant.  Can he do cold calls for me?

A:   RECO has been consistent in its advice regarding sales representatives and brokers hiring unlicensed assistants: these assistants cannot undertake any activity that falls into the category of “trade”. “Trading” would include activities such as being on-site at open houses, door knocking in a farming area, phone solicitation, showing properties, or being a participant at an offer or listing presentation – this is only a partial list.

If you want to read the full version of what the Registrar has to say about it, click here.

(Information taken from RECO’s Registrar’s Bulletin, March 7, 2012)

Ethics Corner

The following article was printed in the September, 2016 issue of OREA’s The Edge. It is reprinted with permission.

RECO DECISION: Lot size error leads to complaint
The following decision from RECO Discipline and Appeal Hearings has been condensed. All individual and corporate names have been changed.

 

THE FACTS
Jackie and Mike wanted to sell their property. They were working with Mark, a salesperson with Tops Realty. Mark listed their property on the MLS® System. The lot size in the listing was stated to be 31.99 feet by 119.91 feet.

About a month later, Cindy and Bob signed an Agreement of Purchase and Sale (APS) to buy the property. Since the information about the property was obtained from the MLS® listing, the lot size in the APS was also stated to be 31.99 feet by 119.91 feet.

After purchasing the home, the buyers discovered that the lot size was smaller than described. They complained to RECO that the lot size was in fact 31.99 feet by 109.91 feet and that they were misled by the MLS® listing and the APS. The couple said they felt they had overpaid for the property. They also included their sales representative, Sally from Witt Realty, in their complaint because she did not check the dimensions of the lot.

The buyers provided RECO with a copy of the MLS® listing from May 2006 prepared by Country Real Estate as well as a report by the Municipal Property Assessment Corporation, both of which included the correct property dimensions. Cindy and Bob also provided two MLS® listings for 2012 and one for 2013 — all with incorrect dimensions — prepared by Mark of Tops Realty.

Mark stated that the 2006 listing stated that the dimensions were 32 feet by 110 feet. He tried to change the numbers to be more precise, matching them with data from GeoWarehouse, a web-based property information site, which showed the dimensions to be 31.99 feet by 109.91 feet. He said that he had made a mistake when entering the numbers and that mistake continued to appear in the subsequent re-listings of the property.

 

THE FINDINGS
The RECO panel determined that Mark acted unprofessionally by failing to verify the correct lot dimensions of the property that he listed for sale on MLS® and in the APS. Mark’s actions also exposed his sellers to possible civil litigation for misrepresenting the property.

The panel ruled that Mark breached the following sections of the REBBA 2002 Code of Ethics: (4) Best interests; (5) Conscientious and competent service, etc.; and (38) Error, misrepresentation, fraud etc. Mark’s actions also exposed his sellers to civil litigation for misrepresenting their property.

 

THE PENALTY
Mark was fined $6,000, payable to RECO. The full decision can be viewed on the RECO web site at www.reco.on.ca. Look under “Complaints and Enforcement” and then under “Regulatory activities and decisions” and scroll down to “Disciplines and appeals decisions.” Scroll down and click on “Search by year.” Select 2014 then “Search.” It is the second case dated 2014/12/01.

Ethics Corner — RAHB members and directional signs

RAHB members are required to comply with all municipal sign bylaws:

MLS® Rules & Regulations, Section 10 – Advertising
10.03  Signs giving notice of sale, rent, lease, development, exchange or open house …may only be erected on locations that conform with Municipal and Provincial sign legislation, all applicable laws, regulations, codes and bylaws.…

Members must abide by the sign bylaws of the municipality/region in which the listed property is located:

Burlington – By-law No. 034-2007 (Click on “Download Original By-law” – see especially page 19)

Grimsby – By-law No. 97-45

Haldimand – By-law No. 1064/10 (references throughout the document)

Hamilton – By-Law No. 10-197 (see especially page 27)

Why is it important?
Open house/directional sign bylaws exist to ensure that sight lines for drivers and pedestrians are unobstructed and, in some cases, so that signs are not left to clutter boulevards, medians, etc.

If RAHB members do not comply with municipal sign bylaws, they may be seen as causing a visual distraction, adding to what may be perceived as unsightly clutter, and as lacking professionalism.

Consequences

  • Municipalities have fines for removing and storing signs that don’t comply with their bylaws
  • A complaint may be filed with RAHB’s Professional Standards Committee

If you see a sign that doesn’t comply with municipal bylaws, you can:

  • Contact the owner of the sign and remind him or her of the sign bylaw for that municipality
  • Contact the municipality in which the sign is located and let them deal with it as a non-compliant sign
  • Take a time- and date-stamped photo clearly showing the location of the sign and forward it to the RAHB Professional Standards Committee (c/o Angela at the RAHB office – angelam@rahb.ca) along with a letter of complaint that cites the bylaw that is being breached. Note: RAHB cannot enforce the municipality’s sign bylaw; it can only enforce its rule requiring compliance with the bylaw

Be aware that bylaws differ from municipality to municipality, so what is non-compliant in Burlington, for example, may be compliant in Grimsby or Hamilton or Haldimand.

If you see a sign that doesn’t comply with municipal bylaws, you should NEVER remove the sign – members may never interfere with another member’s sign.

Your questions about pre-emptive (bully) offers answered!

Members have been asking about how to deal with pre-emptive, or bully, offers.  You asked, we answer.

Q. When a Seller says “No offers until …”, can I present an offer that comes in before the date specified?

A. The short answer is No. When a seller provides written instructions, via OREA Form 244 “Seller’s Direction re Property/Offers”, that offers will be held until a particular date, those instructions must be followed to the letter.

Q. What if the buyer insists on having the offer presented?

A. The buyer will have to wait with everyone else or walk away … the instructions from the Seller are that no offers will be presented until a specified date in the future.

Q. What if the Seller changes his or her mind and wants to see an offer?

A. In this case, and you are the listing salesperson, you must do two things:

  1. Change the remarks section of your listing to remove the “no offers until” notation
  2. Contact all the Co-operating Salespeople who showed an interest in presenting offers or who registered offers and arrange for a time for offer presentation of all offers

These two steps should be performed with all reasonable speed.  Now that offers are being presented to your Seller, you want to make sure the Seller has the opportunity to review all offers to they can get the best outcome on the sale of their home.

(Note:  as good practice, you should also contact all Co-operating Salespeople who showed the property and let them know offers are being presented – they may have clients or customers who were holding off making a decision about making an offer until closer to the date specified for offer presentations.)

Q. What about “No offers until (specified date), but the Seller will review offers prior to this date”?

A. This is a bit of an odd instruction, because it’s really saying the Seller will look at offers whenever they come in. However, if you have a Seller who mostly wants to wait for offers but will look at something that comes in before the specified date, here’s what you do:

  1. Have your Seller complete Form 244 “Seller’s Direction re: Property/Offers” and make a note of the full instructions in the Remarks section of the listing.
  2. If you get an offer before the specified date and the Seller wants to review the offer, contact all Co-Operating Salespeople who registered offers to let them know they can present their offers as well.

Again, to be sure you are being fair to everyone and you are working in the best interests of your Seller, you should also contact the Co-operating Salespeople who showed the property to let them know that offers are being presented, just in case their buyers are interested in putting in an offer.

You should be contacting the Co-operating Salespeople with reasonable speed so your Seller has the chance to review all offers and get the best outcome on the sale of their home.

Q. What do you do if someone isn’t following the rules?

A. If you find yourself in a situation where the listing brokerage didn’t let you know that offers were being presented before the time noted on the listing, you should file a formal complaint with either RAHB’s Professional Standards Committee or RECO. For more information about how to file a complaint, contact Angela at angelam@rahb.ca or 905.529.8101.

New procedure for listings for sale and for lease

Before RAHB listings were uploaded to Matrix, you were able to load listings into Fusion which were both for sale and for lease on one MLS® number. Members searching for listings that were only for sale or only for lease would see your listing because that’s the way Fusion worked.

Matrix, however, operates differently.  If you have a property that is both for sale and for lease, you MUST broker load the listing twice in Fusion: one listing for sale only and the other for lease only. This is the only way to ensure that your listing will be visible to others searching in Matrix if they are searching for only leases or only sales.

If you have existing listings that are For Lease or Sale, you can edit them – change the original to a sale and then upload a duplicate for the lease.

As always, if you have any questions, please get in touch with the RAHB MLS® Department at 905.667.4650.