- By Nada Jensen
- Posted Monday, May 02, 2022 10:14 am
These companies are allowed to operate with almost no oversight, and that’s risky for home buyers and sellers.
When it comes to buying and selling your home, the stakes are high. Young families use their life savings to scrape together a down payment while seniors put decades worth of hard-earned home equity in the hands of trusted real estate professionals.
The government’s role in the housing market has always been to protect home buyers and sellers against dishonest actors. That work has underscored a basic principle of our real estate system: no matter who you are or where you live or how you buy or sell a home, your provincial government will protect you against bad actors.
Unfortunately, when it comes to the resale real estate market in Ontario, that principle is being undermined by an out-of-date exemption which some real estate “auction” companies are using to sidestep oversight and avoid rules aimed at protecting consumers.
In the 1950s, traditional estate auctioneers were made exempt from having to follow Ontario’s real estate rules so they could help farmers sell their properties alongside their livestock, equipment and business.
In Ontario, real estate brokers must take mandatory licensing education, pass a background check, carry insurance and follow rules that are designed to protect consumers.
Since auctioneers are exempt from the rules in Ontario, real estate auction companies operate with almost no oversight, and that’s risky for home buyers and sellers. They use the farm auction “loophole” while marketing themselves like a traditional real estate brokerage and making it almost impossible for consumers to tell the difference.
For example, one of the most common consumer protection issues in real estate auctions is “phantom” bidding. Phantom bidders are non-legitimate prospective buyers who are planted to push bidding higher and create a false impression of a more...[READ MORE]