B.C. real estate: Can the public trust industry to govern itself?

Sometimes, real estate in B.C. feels more like the plot of an overloaded thrillerthan a regulated industry.

Shadow flipping, predatory pricing, conflicts of interest: every day brings a new tale of realtor greed and depravity in a gold-plated market. Throw in some Lamborghinis and a few preening models and you've got ...oh, that's right,Vancouver.

There is a dedicated cop in this story, of course: the Real Estate Council of B.C. But the slow drip of bad news stories has inevitably raised questions about the organization's ability to handle the job.

In itsinterim report this week, an advisory group aimed at overhauling regulation of the industry says public confidence in the sector "has been shaken" by the barrage of revelations.

Carolyn Rogers, B.C.'s superintendent of real estate, chairs the group.

She saysthe task force needs to consider whether self-regulation is adequate to police a multi-billion dollar industry mired in scandal.

The question for many: how can it be?

'Entirely reactive policing'

David Eby, an NDP MLA who has been a vocal critic of the existing regulatory regime, says he thinks Rogers' 'Independent Advisory Group' has come up with a number of praiseworthy suggestions.

But he says the very nature of the probe a council-initiated groupthat considers submissions from stakeholders and the public,as opposed to a government-runaudit-style inquiry underscores abigger problem.

According to the interim report, the group has met twice since releasing its terms of reference to the public.

They've spoken with real estate council staff, whoidentified gaps in regulation and proposed solutions for tacklingissues ranging from contract assignment andconflictof interest tomoney laundering.

But as Eby points out, the practiceswhich led to the creation of the task force in the first place were raised by the media, not the regulator.

The Globe and Mail firstrevealed the practice of"shadow-flipping", where realtors earn multiple commissions off the sale of the same house. Those reports led the province to promise acrackdown.

This week, the same paper alleged violations of real estate regulations by New Coast Realty. The council then scrambled to issue licence conditions.

"It's an entirelyreactive policing of the industry," Eby says.

"And as long as its reactive, they'll always be one step behind the fraud artists."

Common sense suggestions

For its part, the real estate council says it has taken measures to beef up enforcement andlooks forward to implementing the advisory group's recommendations.

Those suggestionswill hit home within anyone who has bought or sold a house in B.C. in recent years.

For a start, Rogers says most people think the council's fines are too low. A maximum of $10,000 is seen as the cost of doing business in a market where a million dollarhome is considered a bargain.

And she saysit's hard to comprehend how adouble-ended dealwhich sees one realtor represent both buyer and seller is good for anyone but the agent in the middle of the contract.

It's hard to imagine the province not acting on those two recommendations, but why has ittaken a crisis for either to become reality?

The housing market has been supercharged for years; whether the price is $100,000 or $1 million, the potential for conflict of interest inherent in a double-ender is obvious to anyone who has been asked to agree to dual agency.

But it's the kind of form people sign forfear they'll miss out on a deal; the same anxiety which makes buyers put 'no-conditions' offers way over asking priceon homes worth a decades-worth of wages.

How can it possibly be in the best interest of a consumer to purchase a house without knowing the least thing about what's actuallyinside it?

More 'consumer education' necessary?

The task force is seeking public input. Rogers says more "consumer education"is necessary.

But when it comes to continued self-regulation, many people whohave gone to the council already feel the experience was an education enough.

The bulk of complaints are settled in consent orders, which include a statement of facts agreedto between the realtor and the council along with a list of sanctions.

Complainants I've managed to track down have feltleft out of the process, faced at the end of the daywith a description of events bearing little resemblance to whatthey actually endured and a deal which minimizes wrongdoing on behalf of the realtor.

The council offers no financial restitution, meaning the only chance of getting some form of payback is through an expensive and lengthy court process.

Even so, realtors have admitted to serious wrongdoing involving lies andforging clientnames on documents; at what point should the police get involved, as opposed to a self-regulating industry body?

Looking after number one?

The province has taken away self-regulatory power from another group in the past: teachers.

In 2012, the government replaced the old B.C. College of Teachers with the Teacher Regulation Branch after a report which described the old college as "dysfunctional".

The report, written by lawyer and former public servant Don Avison, concludedthe teachers' union exerted too much influence overthe college's regulatory activities.

Avison found a proper balance didn't exist between the public interest and the interest of members. He also saidthe college itself was not viewed as "an independent and credible entity."

Sound familiar?

Of course those were teachers, hardly a favourite group of the provincial government's.The real estate industry, on the other hand, drives the economy.

One looks after your children, the other after your house. Should either be trusted to look afterthemselves?