Vancouver real estate agent's deception prompts debate on 'double ending'

A Vancouver real estate agent has been suspended after admitting she went to great lengths to conceal the fact that she was double-ending a deal. 

Lin (Kelly) Kong asked another agent to fill out paperwork saying he was representing a buyer he had never met, so Kong could avoid negotiating with her seller over commissions.

The case highlights systemic issues that arise when agents represent both buyer and seller in a deal. Some question whether a ban is the right solution.

Kong was reprimanded by the Real Estate Council of B.C. for her "deceptive manner" and handed a 90-day suspension in early July.

Secret double-ended deal

According to a statement of facts, Kong was the listing agent for a $1.3-million house in Burnaby, B.C. in 2014.

When a buyer who did not have an agent made an offer on the house, Kong told him she would represent both his and the seller's interests. 

However, Kong asked Yang Yang, a Realtor from a different brokerage, to sign documents saying he was the buyer's agent even though the two parties had never met or spoken to each other — a violation of Real Estate Services Act.

In the signed documents, Kong says she explained her actions to the buyer and told him she was only adding Yang's name so the seller would not attempt to negotiate her commission. But the buyer claims he was never told..

Yang says he signed the papers as "a favour" to Kong without realizing the implications.

He was also disciplined by the council and has already completed a 60-day suspension.

When contacted by CBC News, Yang said he did not want to comment on the case and Kong did not reply to any messages.

To ban or not to ban?

In addition to the suspension, Kong was also fined $1,500.

William McCarthy, a past president of the Institute of Real Estate Management, says that's a pittance compared to the amount she likely collected in commission, estimated at about $37,000.

McCarthy, who still acts as an agent, says dual agency should never have been allowed in the province.

"How can one person serve two masters?" he asked. "It's a perpetual conflict of interest."

An interim report issued by an advisory group tasked with reviewing B.C.'s real estate industry has already recommended putting an end to the practice.

McCarthy says with such high financial returns at play and no policies against it, it's "very, very tempting" for Realtors to want to represent both parties.

"If you look at this case in particular, the agent in question took a deliberate attempt to not only act as a dual agent but to cover up the facts."

But Tom Davidoff, a housing economics professor at UBC, calls a potential ban draconian.

"Part of the benefit of a good Realtor is that they've got a good network," he said.

"Double ending is a tough one because exploiting your network to bring in a buyer isn't inherently a bad thing," he said. "Banning it can get rid of some legitimate transactions."

Davidoff cautions a ban could create situations in which agents do "favours" for each other by enlisting friends to act on either side of a real estate transaction in return for kickbacks.

Instead, Davidoff favours stronger regulation on mandatory disclosure — giving buyers and sellers the chance to decide what they want for themselves.

Buyer beware

To prevent potentially shady deals, McCarthy says the Independent Advisory Group's recommendation for far more significant penalties can serve as a deterrence.

The new recommendations would leave Realtors on the hook for up to $250,000 instead of the current limit of $10,000.

McCarthy says typical commission levels hover at around seven per cent for the first $100,000 of a sale price and then drop to 2.5 to three percent for the remainder of the price of the house. 

According to the Real Estate Board of Greater Vancouver, the benchmark price for a typical detached home in the area is $1.4-million.

Regardless of what changes come after B.C.'s real estate industry becomes independently regulated, McCarthy recommends "buyers beware".

He says those looking to get into the market should start by doing background checks on potential agents.

"​You check the resumé. You check their records. You check with former clients. You check with the agency. You try to see if they have any complaints or charges against them as best you can," he said.

Even consider whether their managing brokers are reputable as they provide another level of oversight within their offices, he said.

And finally, he believes clients need to stay engaged to keep an agent on their toes.

"Be demanding ... expect a lot from them because they're getting a lot from you."