I set out to write an article on the contradictions and complexities of dual agency (sometimes referred to as double ending a deal) in real estate but in reviewing the different court cases and literature, I soon had so many thoughts on paper that I decided to make it a series.
I’ll start by throwing out a few ideas for consideration and in the next few articles I will dive deeper into each idea one by one.

“If two consenting adults choose to attempt a transaction through one agent…I argue they should bear more responsibility in the outcome.”

Firstly, in researching this, one thing that stood out in all the literature was the singular focus on the actions and responsibilities of the real estate agent with only fleeting enquiries into the behaviour of the parties, both consenting adults. 

As well, I see what appears to be a flaw in the way the law treats dual agency in real estate. There is a major difference between legal disputes and real estate transactions in that when two parties contact lawyers, there is already a dispute between the parties and the lawyers are engaged under the accepted premises of an adversarial process. 

In a real estate transaction, the two parties are generally aiming to conclude a mutually satisfactory transaction (though often each is hoping to come out a little better than the other party). It is usually only after or at the end of the transaction that the situation tends to become adversarial, yet the entire process is legally treated as adversarial from the beginning. If two consenting adults choose to attempt a transaction through one agent, they are doing so in the hopes of gaining some benefit and as long as that consent was given with full and timely disclosure, I argue they should bear more responsibility in the outcome.

This human tendency that aggravates dual agency is, to me, best described in the joke about two horse traders. A fellow comes upon two horse traders arguing. He asks what is wrong and they both say that the other guy ripped them off in a trade of horses. He asks them why they didn’t just trade back then and forget about it. Both reply that they don’t want to get ripped off again. Doesn’t that sum it up so well?

“The added risks involved, in my opinion, more than justify the full commission being paid to the one agent, yet both parties often expect a reduction.”

Oftentimes, one of the parties, usually the buyer, will request their agent to contact the other party on their behalf in the hopes of effecting the transaction without a second Realtor and expecting you, the agent, to work in their best interests against the other party. There are a few reasons for this, however, the hope that they (the buyer) will come out ahead is not the least of them, and this puts the real estate agent in a very unenviable position. Sometimes, if you don’t do it, the buyer will find someone who will. Additionally, the added risks involved, in my opinion, more than justify the full commission being paid to the one agent, yet both parties often expect a reduction.

Given that both parties are often looking for “a deal,” this puts the agent immediately in a seemingly irreconcilable conflict of interest. Usually, the more sophisticated client is the one initiating the process and their hope of garnering a “deal” diminishes the more the agent provides market information to the other party. So, the more work an agent does, the less the chance of a deal, and the greater chance of not getting paid for doing more (and better!) work. The less work an agent does, the greater the risk of legal liability and sanctions.

“Finally, under fiduciary duty, we are expected to place our interests beneath those of our clients.”

At this point, I should add that there is nothing illegal or unethical about seeking a “deal.” This is part of human nature, and there is nothing inherently wrong with it. I say this because this conflict is compounded by the fact that the initiating party is often an active investor, the kind of client an agent needs to thrive. The fact that we are in fiduciary relationships per se (fancy legal way of saying by default), precludes agents from favouring the better client in effecting a deal. 

Finally, under fiduciary duty, we are expected to place our interests beneath those of our clients. I find this a curious statement. I have also seen this worded as we are to place our clients’ interests as paramount. This I have no issue with, but the first statement I do because, as worded, it implies we must diminish our interests. 

This begs the question, how far? I expect a) to be remunerated for my efforts, and b) that that remuneration is fair—and I am not prepared to reduce these expectations. Everyone expects this when they go to work in the morning, but am I to diminish these interests? Why? And how much so? 

Stay tuned for more on these thoughts as we do deep dives into each one individually as we explore the wonderful world of dual agency.

Like many of us in Canadian real estate, I have been watching the conversation around the Ontario Realtor Wellness Program (ORWP) in REM. By now, we are all aware of the recent court case challenging the ORWP. The plaintiffs are alleging human rights violations including, among others, age discrimination for those who have to pay the same as everyone else but receive lower benefits, and inferior coverage for those who have spousal or other benefits.

To date, leadership at OREA has held firm on the mandatory nature of the plan. So, today, I would like to reflect on the arguments being made on both sides from the standpoint of ethics.

Mixed sentiments

In a previous REM article, many claims were made in the comments section including such arguments as the detractors are “a fringe minority”, “they [OREA] are just lining their pockets”, and my personal favorite, “it was a democratic process so if you don’t like it, leave”. There was also an open letter to the editor extolling the virtues of the program. 

I would like to address the letter and the comments before making my main argument as to the correctness of the decision. The letter writer made some very good points about how the program benefitted her, and having been a realtor most of my life, I certainly empathize. That said, the fact that something is good for me is not an argument to make it mandatory for someone else.

“The will of the majority, with respect for the rights of the minority”

Regarding the comments made, I would like to deal with the last one first. “It was a democratic process so if you don’t like it, leave” is perhaps the most undemocratic statement I’ve heard in a long time. How often do we hear democracy described as “the will of the majority”? For some inexplicable reason (inexplicable because I hated social studies), I have always remembered the words of my high school social studies teacher, Miss Mondea: “Democracy is the will of the majority, with respect for the rights of the minority.”

Backing up her statement, in Democracy in America, one of the most influential books of all time on government, Alexis de Tocqueville warned us about the tyranny of the majority. I am not claiming that anyone is acting as a tyrant, but I am simply saying that when we are in the majority, ethics demands that we respect the rights of the minority – one day, we will have our turn in the minority.

Now, the first two arguments are called ad hominem arguments, or arguments against the person. These are essentially non-arguments. The detractors may or may not be a fringe minority and OREA may or may not be lining its pockets, but even if both were true (which they are almost certainly not) they have no bearing on whether or not the policy is good.

Only the relative merits or demerits of any position are what matters. Only arguments that speak to the issue are valid. And, on that note, I would like to address the policy strictly on its apparent merits and demerits.

Leadership is responsibility

I must first address the issue of management responsibility. Here, I’m reminded of when Robert Joss became dean of the Stanford Graduate School of Business, he received an organizational chart showing him, the dean, at the bottom below staff, faculty and students. The message was clear: being the leader isn’t about power – it’s about responsibility and you are responsible to all of these people.

Perhaps the greatest management guru to have ever lived, Peter Drucker, said it best: “Leadership is responsibility.” FULL STOP.

The big question

Here’s the question, then: is making the OREA benefits package mandatory for all members an appropriate exercise of responsibility or an exercise of power? 

If the evidence shows it to be a wise exercise of responsibility, then it is justifiable. But, if it proves to be an exercise of power, it’s questionable. So, let’s examine the pros and cons of the mandatory policy.

Arguments for and against

From all I’ve read, the only argument for making the policy mandatory is it will lower costs for all members.

On the flip side, the arguments against a mandatory plan are that some members

• Already have their own plan which they prefer,
• Have spouses with their own plans,
• Have plans that are apparently superior to the OREA plan, or
• Just don’t want the plan.

We need to ask if the difference in cost for the members who want the plan outweighs the rights of those who don’t.

And this is where I am going to leave the discussion to you, as I do not know the answer.

It’s up to you, all 96,000 members, managers and directors of OREA to look at both sides of the issue. What is best for all members of OREA? What is the best policy for everyone? A good ethical decision is not what we have a right to do, it is what is the right thing to do.