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Desperate times call for financial shenanigans
Maxed out: RE/MAX Executive’s Scarborough office,
at 1225 Kennedy Road
Image credit: Jessica Darmanin
Imagine writing the biggest cheque of your life, say $25,000, for a deposit on a new house, then discovering your broker was playing fast and loose with your finances. In the space of a few short months this past winter, three Toronto brokerages—HomeLife Arianna, HomeLife All Way and RE/MAX Executive—had their bank accounts frozen by the Real Estate Council of Ontario because of so-called accounting irregularities.
For the brokerages, getting frozen means an effective instant dissolution of their businesses. The money these brokers have allegedly made off with includes homebuyers’ deposits and agents’ commissions, which are meant to be held in trust until the deals go through. Buyers can apparently relax, since their deposits are protected by insurance. The same is supposed to be true of agents’ commissions, but one agent who’s been in the business since 1987 and with RE/MAX Executive for the past four years says there’s some disagreement on the extent of coverage. The policy stipulates up to $500,000 per occurrence of fraud, not per agent, or even per branch. For a firm like RE/MAX Executive, with three offices and dozens of agents, $500,000 wouldn’t come close to covering the outstanding commissions. One agent figures she and her partner are owed $30,000, with others in the firm more like $70,000 and up.
The investigation is ongoing. To the casual observer, it looks like the market has become so brutal that some brokers are tempted to pillage the tills in sheer desperation. Can a government bailout for realtors be far behind?
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