Brokers, Managers and Brokers of Record
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.
It is important to note that the focus upon the Broker’s role appears to be someone in a supervisory position in an office environment. In Ontario, many salespersons became “brokers” simply because they didn’t like the “sales” role. They didn’t want bto supervise anyone. They still worked independently in the sales role but they just wanted to change the “label”. However, this is a review across Canada.
This is an excerpt concerning competency:
“COMPETENCY PROFILE FOR REAL ESTATE BROKER
The Broker is expected to take responsibility for the actions taken within and on behalf of the brokerage. This includes managing the various aspects of the business and ensuring compliance with all regulatory and legislative standards.
A competent Broker is able to:
1. MANAGE COMPLIANCE
The Broker plans, organizes, controls, and leads activities that ensure compliance with laws and accepted standards. These activities can include audits, security procedures and controls, developing and implementing policies and procedures.
1.1 Conduct business in accordance with legislative obligations and standards of practice.
1.2 Instruct personnel regarding public protection requirements.
1.3 Protect client information through safeguards, policies, and procedures.
1.4 Oversee advertising and promotion in accordance with regulatory requirements.
1.5 Ensure salespersons have fulfilled brokerage, disclosure, and regulatory obligations for transactions.
1.6 Verify that transactions are legally binding.
1.7 Fulfill anti-money laundering, FINTRAC, and client identification requirements.
1.8 Report circumstance or potential claim under regulatory insurance program.
1.9 Conduct inspections, investigations, and other standards enforcement procedures.
1.10 Maintain document and records management systems.
1.11 Fulfill brokerage obligations for records management and retention.
2. MANAGE FINANCE
The Broker remains aware of the brokerage’s cash flow and financial stability. The broker keeps the business running smoothly through budgeting, accounting, forecasting, and adjusting plans.
2.1 Oversee setup and operation of accounting systems and structure.
2.2 Analyze financial statements.
2.3 Review the brokerage’s financial performance.
2.4 Monitor trade processing and trust accounts.
2.5 Manage funds held in trust in accordance with trust terms and legislative requirements.
2.6 Provide financial or trust account reporting in accordance with legislative requirements.
2.7 Implement internal accounting controls.
2.8 Manage budget, compensation, and incentive plans.
2.9 Resolve compensation disputes fairly.
3. MITIGATE RISK
The Broker identifies, evaluates, and prioritizes risks, then coordinates resources to minimize, monitor, and control the probability or impact of unfortunate events. Risk mitigation strategies may also lead to opportunities.
3.1 Maintain a risk management policy.
3.2 Maintain insurance coverage.
3.3 Implement guidelines for fraud prevention.
3.4 Create systems for review of all transactions.
3.5 Implement general personal safety policies.
3.6 Manage high-risk activities and common problem areas.
3.7 Prevent misrepresentation, negligence, and tort liability.
3.8 Manage risk prevention training.
4. MANAGE PERSONNEL
The Broker plans, organizes, compensates, and supports individuals for the purpose of contributing to the brokerages’ goals.
4.1 Define roles, responsibilities, and employment status within the brokerage.
4.2 Recruit personnel, as needed.
4.3 Comply with regulatory requirements related to human resources.
4.4 Comply with applicable workplace legislation.
4.5 Establish communication systems.
4.6 Provide orientation, training, and mentorship.
4.7 Assist personnel with goal setting and development.
4.8 Take remedial and/or disciplinary action when required.
4.9 Maintain equitable personnel policies and procedures.
4.10 Implement retention plans and tools.
4.11 Engage in succession planning.
4.12 Promote engagement and satisfaction.
5. PROVIDE LEADERSHIP AND GOVERNANCE
The Broker provides guidance and direction for the brokerage, and designs or adopts structures and processes that ensure accountability.
5.1 Evaluate own potential for entrepreneurialism.
5.2 Construct a business plan.
5.3 Secure financing for the brokerage.
5.4 Register the brokerage according to ownership type and regulatory requirements.
5.5 Develop operational plans, policies, and procedures.
5.6 Keep policies and procedures accessible and up to date.
5.7 Establish sustainability plans.
5.8 Monitor the business environment to address potential challenges and opportunities for growth.
5.9 Lead the brokerage through vision, communication, and engagement.
5.10 Market the brokerage and its services.
6. LEVERAGE INFORMATION TECHNOLOGY (IT)
The Broker maximizes the value of information technology within the brokerage. This includes assessing a situation from an IT perspective and the impact of technology when creating solutions, including how it can increase the brokerage’s success.
6.1 Maintain a brokerage IT infrastructure that is secure, properly licensed, and up to date.
6.2 Maintain brokerage IT policy.
6.3 Provide training in use of information and communication technology to personnel.
6.4 Monitor use of social media pertaining to the brokerage.
6.5 Maintain an accurate website.
6.6 Use data analytics to inform evaluations, strategies, and decisions.
6.7 Collaborate with IT specialist, as needed.
6.8 Stay up to date with relevant changes to technology.
It would certainly appear that is is the role of Managers and Brokers of Record at Brokerages. In Ontario, many sales personnel have taken extra Courses in order to qualify as Brokers but have no interest assuming a supervisory role.
In fact, there is very little supervision at most Brokerages. Help is often available only to those who actually seek it out. While Continuing education programs may be hosted, often less that 10% of the sales staff will show up, and whatever the Program happens to be, it’s usually the same 10%.
Brian Madigan LL.B., Broker