Monthly Archives: September 2017

Taken from “Coastal Appraisals”.
http://coastalappraisals.net/do-you-really-need-a-real-estate-agent/

On September 7^th, an article in the Vancouver Sun entitled, “Proposed new rules address problems in real estate industry” caught my eye. In the article, the author, David Carrigg, outlines proposed new rules in BC that have been drafted by the Superintendent of Real Estate, Michael Noseworthy. Mr. Noseworthy plans to eliminate multiple issues such as when the realtor represents both the buyer and seller. The lack of oversight in this area gives realtors the power to put their own interests ahead of their clients’ and potentially personally enrich themselves.

When a realtor is hired, they are ethically and professionally obligated to work in the best interests of their client, whether that be selling property for the highest price, or purchasing property for the lowest price. In the market today, it is not an unusual practice for a realtor to represent both the buyer and the seller. This is an issue because it creates a conflict of interest. The agent can not properly represent the best interests of both parties. This gives them the opportunity to influence what their client buys and the selling price, which in turn gives them a higher commission. This is what is know as “dual agency”.  To eliminate this, real estate agents will no longer be allowed to represent both the buyer and the seller unless there is limited access to real estate agents such as might be the case in rural areas. Another aspect is that the ultimate recipients of the commission earned on a sale must be disclosed to the buyer and seller. This includes when any part of the commission is being shared with another realtor. This is to ensure transparency and to discourage realtors from attempting “dual agency” with a partner.

I support the proposed new rules because they encourage good behavior by all real estate agents. Before, those who chose to be ethical were at a disadvantage to other agents who had a more flexible moral compass. Hopefully with this new legislation, it will now be a more even playing field and the consumers will benefit as a result.

This proposed new legislation from Michael Noseworthy is long overdue and should encourage more ethical behavior by realtors in the housing market. Although most realtors have always had their clients’ best interests at heart, the evidence suggests that not all did. Hopefully when the new laws go into effect on January 15^th, 2018 it will encourage a generally more ethical real estate market for consumers.

Word Count: 414

Photo taken from Mid Island Collision Center’s website: http://www.midislandcollision.com/brands/volkswagen/

When the name Volkswagen is mentioned in conversation, many different adjectives may come to mind. Before September 18^th, 2015, the majority of those words would have been positive: reliable, well-built, affordable, and respected. Nowadays, you may get different results: dishonest, manipulative, and unethical. What happened to change this? In 2015, on September 18^th, the United States Environmental Protection Agency discovered that all Volkswagen cars with turbocharged direct injection diesel engines gave off 40 times more Nitrogen Oxides (NO_x) than was permitted by the law [1]. This happened whenever when the car was outside a test environment. The car was designed so that when it was being analyzed in a lab, it would produce less NO_x at the cost of some performance. This was a work around so the vehicles could still be sold even though they did not meet emission standards [1].

Due to this, Volkswagen’s reputation and stock price dropped dramatically and they were required to spend over $20 billion to settle criminal charges against them, with many executives, including Oliver Schmidt, facing jail time for their actions [2]. This is the result of value based management; or, to be more specific, this is the result of a misinterpretation of value based management. The main idea of this principal is to “maximize shareholder value” [3]. The Volkswagen executives thought the best way to accomplish this goal was to produce high performance, fuel efficient cars for the cheapest cost. To do this, they needed to cut corners, resulting in the poor and short-sighed decision they made. What these executives do not realize is that ethics are just as important to value based management as any other element [4]. On September 4^th of 2015, their stock price was $162.20; On October 2^nd, their stock price was at $92.36 [5]. This is a drop of 69.84% in value, in just under one month. Their pursuit of maximizing stock value had the opposite effect intended because they did not realize the power of ethics.

Almost two years later, Volkswagen is now starting to recover. They recently announced plans to become relevant in the market again. They have now bought back and fixed most of the affected cars, and will be releasing them on the market slowly [6]. They are also planning to focus on other types of vehicles in addition to the small compact cars they are know for. Soon they will start producing the Volkswagen Atlas, an SUV with seven seats [6]. With these changes, their stock price has slowly started to rise again with it now at $135.60 [5]. Hopefully Volkswagen has learned the importance of good ethics in business and will continue to be prosperous in the future.

Word Count: 434 words

[1] – BBC: http://www.bbc.com/news/business-34324772

[2] – CBC News: http://www.cbc.ca/news/business/vw-executive-diesel-scandal-1.4235244

[3] – Value Based Management: http://www.valuebasedmanagement.net/faq_what_is_value_based_management.html

[4] – R. Edward Freeman: https://www.youtube.com/embed/bIRUaLcvPe8

[5] – Google Finance: https://www.google.ca/search?rlz=1C1CHBF_enCA760CA760&q=volkswagen+stock+price&spell=1&sa=X&ved=0ahUKEwifqeTDrqHWAhVmrlQKHSnTDIEQvwUIJSgA&biw=799&bih=745

[6] – CBC News: http://www.cbc.ca/news/business/volkswagen-diesel-scandal-1.4271719