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A need for changes to real estate regulations

We found ourselves in the middle of a difficult situation this week. Unfortunately, we have encou...

We found ourselves in the middle of a difficult situation this week. Unfortunately, we have encountered problems similar to this in the past.

Barry Stuart, ICR Commercial

Columnist Barry Stuart, ICR Commercial.

My business manager received a call from an individual who is purchasing a multi-tenant commercial property. We are the listing broker and this buyer is represented by an agent from another brokerage firm.

The buyer was very frustrated with their agent and wanted to know how they could proceed without him.

So what’s this ongoing problem I’m referring to? “Can an agent represent both residential and commercial clients?”

The answer is “Yes, they can!”

The real estate license I was issued when I began my career allows me to do both (although I have never practised both at the same time).

There was a short period of time in Saskatchewan when the education and certification process permitted licensing in only one of the disciplines. Today, however, when a real estate license is issued in this province, an agent is automatically permitted to again play in both areas of the industry.

Why is the real estate license an issue?

In an earlier blog post, I discussed some differences between residential and commercial real estate.

None of the agents within my company sell single-family residential.

One of my family members just purchased a home and I was asked my opinion on the value the property they were considering. I told them I wasn’t able to provide advice, because I don’t have a working knowledge of that sector. I suggested they discuss it with the residential agent representing them.

Every sale and lease transaction document we use is vastly different from those used in the residential sector.

There are many other significant differences which include but are not limited to: valuation, environmental, building code, zoning, negotiation strategies, building specifications, recommended professional service providers, closing costs, financial consequences of a transaction, applicable federal provincial taxes, construction and building improvement costs, property management procedures and industry protocol.

To put it bluntly, we sometimes cringe when we receive an inquiry from an agent who practises mostly residential real estate. The client he or she is representing might not be provided all of the information they need to make a fully informed business decision.

There is a high probability the client will be blindsided with issues they should have been made aware of.

What was the issue in this situation?

This party was competing with another outside agent when they submitted their offer. The terms they wrote ended up being more favourable than the terms within the other, competing offer.

The conditional period was short in duration. So, their agent was advised that if the offer was accepted they would not be granted an extension beyond the initial conditional period.

Due to the inexperience of this agent, he did not prepare his client for the length of the process they were about to encounter. They now have a need for an extension — and might lose the deal because of it.

It became obvious during the initial tour of this multi-tenant property that the selling agent had no experience in this sector. My business manager attended and ended up leading the presentation.

The other agent remained silent.

A change in this licensing process and policy is necessary before our overall industry will achieve the respect it is seeking.

An old English Proverb says it well . . . “Cobbler, stick to thy last!”

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