Steering or the art of diverting clients' attention to make more money
Steering is currently spreading across Canada and the OACIQ would like to warn Quebec real estate brokers who might be tempted to apply this method that goes against the rules of the industry. This approach– commonly referred to as steering–is used to steer prospective buyers away from suitable low-commission homes to higher-commission homes.
This practice was investigated by CBC's Marketplace program. Using hidden cameras, the team was able to intercept conversations between "fake" potential buyers and brokers who stated that this method seems to be increasingly popular.
During the show, several tactics used by some brokers were described, such as alleging that the seller is not willing to negotiate a lower price, denigrating the property, stating that it is far too expensive for the market, etc. In a nutshell, they do everything possible to get buyers to visit other potential homes that would bring in more money for them1. Some brokers even go so far as to say that the sellers never responded to their request for a visit, while the seller in one of the specific cases of this show turned out to be an accomplice in this journalistic investigation.
Homeowners trying to sell on their own also testified that brokers systematically refused to deal with them because the commission they were offering for selling their homes was lower than the market one. Most brokers would contact people who are selling on their own to try to get a brokerage contract to sell with them.
As stated in clause 7.4 of the brokerage contract to sell, the broker or agency must agree to cooperate with any other agency or broker upon request, particularly regarding compensation sharing.
Under the Regulation respecting brokerage requirements, professional conduct of brokers and advertising, two sections guide brokers in their practice:
40. A licence holder must without delay disclose in writing to the party represented the terms of any shared remuneration offered to the other licence holders collaborating in the transaction as well as the consequences the proposed terms entail.
46. A licence holder may offer to the party for whom the holder is acting as an intermediary only the immovables, enterprises or loan-related products that correspond to the party’s needs or criteria. The holder must also inform the party of the reasons for selecting the proposed immovables, enterprises or products.
Want to help your buying clients determine their needs? Refer them to this article The main steps of buying a house.
The show denouncing steering can be watched here. The episode is entitled Real Estate Secrets.
