What I Submitted on TRESA Reform
By Gary Nusca, CCIM, CIPS, REALTOR®, Broker
Founder & Manager, ICIWorld® Association of Real Estate Brokers and Salespeople
I recently submitted three sets of comments concerning proposed reforms to Ontario’s Trust in Real Estate Services Act (TRESA).
After more than five decades in the real estate profession and more than 32 years operating the ICIWorld® Information Listing Service, I felt it was important to share a perspective based on how real estate opportunities actually develop.
Consumer protection, confidentiality, consent and professional standards are essential.
But before almost every real estate transaction, there is something much simpler:
An owner might say: “I might sell if you bring me the right buyer.”
A buyer might say: “I am looking for an apartment building between $5 million and $10 million.”
A developer may be looking for land.
An investor may be looking for a shopping centre.
A business owner may consider selling but may not want employees, customers or competitors to know.
A landlord may consider selling an apartment building but may not yet be ready to formally list it.
These conversations are often where tomorrow’s real estate transactions begin.
How can Ontario protect consumers and confidential information while still allowing trained and regulated real estate professionals to:
✔ discover opportunities;
✔ communicate general Haves and Wants;
✔ communicate buyer and investor requirements;
✔ network non-identifying information;
✔ make professional connections;
✔ use databases and new technologies to identify possible matches; and
✔ bring buyers and sellers together before an opportunity develops into a formal transaction?
It should be clearer rules explaining the different stages of the process.
I believe there should be practical guidance distinguishing between:
1. Preliminary networking and opportunity discovery
2. Communicating non-identifying real estate information and buyer requirements
3. Confidential opportunity networking
4. Advertising, representation, negotiation or other activities that constitute regulated real estate activity
A registrant needs to understand clearly where one stage ends and another begins.
Learning that an owner might consider selling is not the same thing as conducting a showing, negotiating an offer or publicly advertising an identified property.
Likewise, learning that an investor wants to acquire an apartment building is the beginning of an opportunity-discovery process.
As a potential transaction develops, the appropriate agreements, consents, disclosures and authorizations should be put in place.
One of the principles I stressed in my submissions is extremely important:
If an owner has not authorized the disclosure of an address, identity or other confidential information, it should not be disclosed prematurely.
A professional networking system can communicate useful information such as:
or
Owner may consider selling commercial property — GTA — qualified purchaser required
Information can potentially be useful without necessarily publishing the owner’s name, exact address or other identifying information.
When parties want to move forward, the real estate professional can then ensure that appropriate representation agreements, listing agreements, consents, disclosures and other requirements are addressed before confidential information is disclosed or a showing or transaction proceeds.
Registered real estate brokers and salespeople operate within a regulated profession and have professional obligations concerning areas such as representation, disclosure, confidentiality and conduct.
If legitimate professional networking becomes unnecessarily difficult, opportunity discovery does not simply disappear.
It may increasingly take place through:
🔹 social media;
🔹 informal online groups;
🔹 private chats;
🔹 unregulated websites;
🔹 direct owner-to-buyer communications; and
🔹 other environments involving people who may not be regulated real estate professionals.
Social media can be an excellent communication tool. However, I believe professional real estate networking should also have an important place in the marketplace.
ICIWorld presents another model for consideration.
ICIWorld is not intended to create a secret group in which opportunities are available only to a selected handful of brokers.
The public can search information on ICIWorld.
At the same time, where appropriate, information can be communicated without necessarily revealing confidential identifying information.
A consumer who sees an opportunity can work through a real estate professional to pursue it properly.
After operating this type of information and networking system since 1994, I believe this distinction deserves serious consideration as technology changes how opportunities are discovered.
ICIWorld is not intended to replace MLS®.
They perform different functions and can work alongside one another.
MLS® is an important marketplace for properties formally offered through its system.
An Information Listing Service — ILS can help brokers and salespeople discover:
✔ Haves;
✔ Wants;
✔ buyer requirements;
✔ tenant requirements;
✔ investor acquisition criteria;
✔ possible sellers;
✔ confidential commercial opportunities;
✔ referral opportunities; and
✔ situations that may eventually become formal listings and transactions.
Technology is changing rapidly.
Real estate opportunities can now be discovered through:
🔹 Information Listing Services;
🔹 professional databases;
🔹 referral networks;
🔹 brokerage networks;
🔹 private professional communications;
🔹 mobile applications;
🔹 matching systems; and
🔹 artificial-intelligence technologies.
The regulatory framework should protect consumers regardless of which technology is being used.
The important questions should include:
✔ Was confidential information protected?
✔ Was required consent obtained?
✔ Was the consumer properly represented where representation was required?
✔ Were required disclosures made?
✔ Was the information truthful?
✔ Were appropriate agreements established as the transaction progressed?
I also encouraged a risk-based and proportionate regulatory approach.
Regulatory and enforcement resources are particularly important where there is meaningful potential consumer harm involving matters such as:
✔ fraud;
✔ misrepresentation;
✔ mishandling of trust funds;
✔ unauthorized disclosure of confidential information;
✔ deceptive practices; and
✔ other serious breaches.
Administrative requirements should be proportionate to the consumer risk associated with the activity.
Ontario should be able to provide strong consumer protection while still allowing ethical professionals to communicate, network and innovate.
This issue is larger than ICIWorld.
They come from conversations.
They come from prospecting.
They come from networking.
They come from referrals.
They come from owners who have not yet decided to list.
They come from buyers telling us what they need.
They come from developers searching for land.
They come from businesses considering expansion.
They come from investors searching for their next acquisition.
And increasingly, they may come from technology capable of matching all of this information.
Real estate professionals should have clear rules allowing them to discover those opportunities responsibly.
Protect confidential information.
Require proper consent.
Require appropriate representation, authorization and disclosure when required.
Enforce the rules where consumers are being harmed.
Responsible professional networking can help keep consumers connected with trained and regulated real estate professionals while preserving confidentiality, consent and proper professional procedures.
This article discusses why encouraging consumers to work through trained and regulated professionals can itself be an important part of consumer protection.
Real estate networking is ultimately about much more than individual transactions. A connection between an owner, broker, buyer, investor or developer can eventually help create housing, apartment buildings, businesses, offices, industrial facilities, shopping centres, construction activity, employment and investment in communities.
ICIWorld® has been facilitating professional real estate Haves, Wants and opportunity discovery since 1994.
Our objective is not to avoid regulation.
Our objective is to help trained and regulated real estate professionals discover opportunities while respecting consumer protection, confidentiality, consent and the requirements governing the profession.
I would welcome the opportunity to share our practical experience with RECO, the Ontario government, real estate boards, associations and other industry organizations as these issues continue to develop.