What is the role of a real estate agent? What should they be doing with respect to a real estate transaction?
The Real Estate Council of Ontario (RECO) just published and endorsed some criteria set forth by RERC as follows:
December 23, 2022:
“We are pleased to announce that the Real Estate Regulators of Canada (RERC) have developed competency profiles to enhance professional and competency standards in real estate for salespersons and brokers. The report and the profiles give the industry an opportunity to set clear and consistent guidelines across the country.
This is an excerpt concerning competency:
“A competent real estate Salesperson is able to:
Competencies Performance criteria
4.1 Conduct research
4.1.1 Respect the private and confidential nature of the research.
4.1.2 Outline research outcomes.
4.1.3 Indicate essential areas of expertise required.
4.1.4 Distinguish between attributes and drawbacks of properties used for the analysis.
4.1.5 Obtain information required to generate a complete picture.
4.1.6 Use relevant software, integrated with other data.
4.1.7 Use research methods to gather, verify and analyze information.
4.1.8 Present findings and any remaining gaps.
4.1.9 Know where to find information not generally available on online listing databases. (commercial)
4.1.10 Define the specific commercial sector that is the subject of the research. (commercial)
4.1.11 Determine the nature of the transaction.
4.2 Determine the quality and elements of a property
4.2.1 Describe external factors related to the property.
4.2.2 Perform a visual observation of the property.
4.2.3 Document the property’s features.
4.2.4 Recognize potential issues or problem areas of the property.
4.2.5 Research history of the property to uncover material facts.
4.2.6 Consult with outside professionals on issues that are beyond scope of practice or expertise.
4.3 Perform comparative market analysis
4.3.1 Research relevant properties.
4.3.2 Verify property and market information.
4.3.3 Select relevant units of comparison.
4.3.4 Analyze properties using relevant elements of comparison.
4.3.5 Specify criteria for highest and best-use analysis.
4.3.6 Reconcile value indications and adjust for differences.
4.3.7 Estimate market value of the property. (commercial)
4.3.8 Estimate market value of the enterprise. (commercial)
4.3.9 Consider financial position and available financing.
4.4 Perform financial analysis For investment properties: (commercial)
4.4.1 Determine highest and best use. (residential and commercial)
4.4.2 Review costs, zoning, demand. (commercial)
4.4.3 Calculate financial ratios. (commercial)
4.4.4 Calculate the cost of using leverage. (commercial)
4.4.5 Calculate loan-to-value and debt coverage ratio. (commercial)
4.4.6 Calculate the value of uneven cash flows. For leased properties: (commercial)
4.4.7 Calculate the net effective rent. (residential and commercial)
4.4.8 Understand the value of the tenant covenant and how it affects the property value. (commercial)
4.4.9 Understand net present value of different leasing scenarios.”
While that may be an extensive list, nevertheless, that’s the role of of a real estate agent. If you can’t do these yourself, then it’s up to you to recommend and engage someone who can.
Brian Madigan LL.B., Broker