COVID-19 Q and As: Why are Realtors still listing houses for sale?

The question raised by a Twitter pal is: “Why are realtors still listing houses and why are they considered ‘essential services'”?

Great question!

I confess, I didn’t think we would be exempt from the shutdown, but there was a lively debate in real estate circles as to whether we are essential services or not. Certainly, if you have purchased a new home and need to sell your current one, having a realtor is pretty crucial. Or if you have just moved to Ottawa and have to find a place to live. Or need to sell to avoid foreclosure.

Along with realtors, the government decided that real estate lawyers, moving companies and the land registry system, can continue operating.

That doesn’t mean it’s business as usual. My brokerage closed down last week to the public, then to us as well, unless we make an appointment. Initially, there was a drop box set up for deposits; now we can only process electronic payments. Our college, the Ontario Real Estate Association, is urging us to  have no face-to-face meetings, and not to have overlapping showings, and we have been told by all of them, including RECO, our regulatory body,  not to host Open Houses. In fact, the Ottawa Real Estate Board is stripping out any reference to Open Houses on MLS to try to shut these down.

Here’s what OREA said:

ALL REALTORS® should stop face-to-face business, including open houses, in-person showings, and maintaining agents and public office hours.

Makes sense to me. But note the use of the word “should.”

The problem with  these recommendations is that they are only that — recommendations. They are not enforceable. Once we were designated “essential services”, that allows us to maintain our business models, whatever those are. OREA says that we were designated essential in order to be able to complete transactions, but that’s not what the Ontario State of Emergency says: it doesn’t limit what what we can do.

Also, we are independent contractors, not employees, so our brokerages have to be careful that they don’t cross the Canada Revenue Agency’s line in telling us how to conduct our business, or they might face serious tax consequences. The more control they exercise over our activities, the less likely we can be considered independent contractors as opposed to employees.

REBBA, our governing legislation, has nothing in it that covers this kind of situation either: it doesn’t set out any kind of protocol for how to deal with a pandemic. Absent an amendment, I can’t see any way that a realtor who defies these recommendations could be disciplined. And while our Board can control the data that appears in MLS listings, it has no authority that I’m aware of  to actually shut down Open Houses if an agent wants to host one.

So at this point, the way that realtors conduct these essential services has been  left to the good faith of realtors.

The vast majority of us will restrict how we do business in keeping with best practices. I see many listings now that require agents to vet buyers before showing them a listing to make sure they are not recent travellers; to wipe down light switches before leaving a property; to refrain from touching surfaces, and so on.

The problem, again, is what happens if they don’t?

In my view, it was mistake to decide that realtors were “essential services” without placing a limit on those services, for example,  restricting them to the completion of transactions that were already underway. Or only to vacant properties. But practically speaking, under current law, we can’t avoid face-to-face meetings with new clients. We are also required to verify the identity of those who are listing by meeting them personally. (There are provisions in the FINTRAC money laundering laws  that allow us to use other forms of ID apply when the client doesn’t have adequate ID, but they don’t absolve us from our responsibility to physically meet with the client to make sure we’re not being cat-fished.)

And taking new listings requires agents to go to those properties to take measurements, because we are required to verify MLS data personally. Someone has to go there to take photos or videos, even if the plan is to restrict showings or only have virtual tours. This is not a business that we can transact only from behind our computers.

So, while I’m glad we were included as “essential services”  for selfish reasons — I have some clients anxious to rent and to sell — I think sellers and buyers would be well advised to ask their agents to detail what steps they are taking to ensure their safety and those of the people who enter their homes.

Don’t assume that because this is what is recommended that everyone will do it, or that they can be sanctioned if they don’t. I don’t see any possibility of that happening under current laws. At the moment, these best practices are recommendations only, and completely unenforceable.

This is the fifth in a series about COVID-19’s impact on the Ottawa real estate market. Keep those questions coming!

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