Liability forces professionalism, agents say

by Olivia D'Orazio08 Dec 2014
One of the greatest differences between for-sale-by-owner companies and agents is the liability that a real estate licence carries, say sales reps arguing industry players need to ensure every deal is solid.
“Making sure the [FSBO] business complies to rules that protect the buyers and sellers, and sometimes you need liability to do that,” says Peter Barbati, an agent in Toronto. “If you’re telling someone what to do, you need to be sure you’re right. I think it makes [agents] more responsible for their actions.”
In Ontario, the Real Estate and Business Brokers Act (REBBA) only applies to licenced real estate agents. Real estate auctions and FSBO companies are inadvertently exempt from the legal implications of misrepresenting a property.
“When is the consumer going to realize this?” asks an anonymous commenter in the REP forum. “Maybe when we make the public aware of the liabilities that sellers have faced and the misrepresentation that the buyer has confronted when working outside of a legitimate full-service brokerage? That can cost much more than the “savings” you get as a FSBO.”
To avoid these complications, Barbati says agents need to make sure they’re not only asking questions, but asking the right questions.
“When we ask questions, we need to be sure the question is complete and be sure to find the right answer,” he says. “I’m on the hook if there’s a lawsuit because I failed to do my due diligence in protecting the seller. But because FSBOs are not a brokerage, the REBBA does not apply to them.”


  • by Dave 12/8/2014 12:47:44 PM

    There is still liability on both buyers and sellers through the court systems. FSBO companies only provide a few tools to aid a consumer to sell their own property. There are some areas that are gray, as for a fee a licensed realtor will review any offers on behalf of a seller. The real question is, are these FSBO companies crossing the line and trading in real estate without a license.

  • by FLat Rate Realtor 12/8/2014 1:17:11 PM

    Use a Flat Rate realtor and you get 95% of the commission and he has a license for the liability

  • by Mal 12/8/2014 1:26:52 PM

    Good luck going to court, sounds easier then it really is.
    As for FSBO companies trading in real estate, let's just say there pretty smart. And at the end of the day they can do what they want, charge what they want. Why? Because they can classify themselves as Consultants not Realtors or a real estate company. So the real question here is, who's the fool, us paying 4 to 5 organizations, insurance, license fees and etc... or them. Do we all become consultants and not Realtors? Have no liability, get paid up front with no refund. And to boot, they look and call you, not you looking for them.


Is a Toronto foreign sales tax a good idea?