It was a call that I received with shock and disbelief.
As we know, a trust account is where Real Estate Brokerages and even lawyers place funds that is meant to be applied towards a client’s home purchase. In the case of RE/MAX Executive, with 3 branch locations being in Scarborough, Richmond Hill and Oak Ridges, hundreds of home buyers, sellers and Realtors have been affected when the funds that were to be protected may very well not be there. The Brokers admittance of accounting irregularities immediately led to all the accounts being frozen by the the Real Estate Council of Ontario. Upon investigation, everyone quickly discovered that the Trust account has been breached and the funds were no longer there.
When things finally came to a grinding halt, we immediately went into action to assist the Realtors of that Brokerage in any way possible to keep the doors open. The intent was to assist the Realtors to get answers through this difficult time and applied significant admin staff and effort to arrange for meetings with questions and answer periods. We gave it our best shot but ultimately the line up of creditors, lease issues and collections were just too much to overcome for that location and couldn’t even remain as a branch location for us.
While there, we came across another discovery. The economic model based on compensation packages was completely upside down. We discovered that everyone had some sort of deal and even though there are many rumors of other reasons, this was definitely a large part of the demise. “Free” has serious consequences and you simply can’t run any brokerage and provide service without revenue from agents. Agents that join a Brokerage based solely on “whats in it for me” should always keep in mind that they may need to change their business cards again within a short period of time.
Since the branch location could not remain open, we assisted the Realtors that didn’t stay with us find new Brokerages and get back to what they do best….servicing their clients. We also had many agents stay with us and we welcome them to our Ultimate team. Their professionalism is respected and will be valuable members. In time, the emotions will subside and it’s time to focus back to real estate with the upcoming spring market. We’ll allow the experts at RECO to continue to do the job of closing and paying out deposits and commissions as they come available. Luckily insurance will cover the money missing.
Tim Syrianos
RE/MAX Ultimate Realty Inc
Filed under: Personal Stories and Opinions, Toronto Market Watch Tagged: | Toronto Real Estate Update
