Marty Douglas

Shawn O'Hara: Welcome, everybody. My guest today is Marty Douglas. Marty attended the University of Victoria and began his real estate career in 1970. He was a managing broker from the early 80s until 2017. He's been involved in the ownership and management of several real estate and insurance agencies, all of which are in Vancouver Island. He and his firms have won local, national, and international awards. He served as a director and as a past president of the Vancouver Island Real Estate Board, VIREB. He also served as president of the British Columbia Real Estate Association. He was chairman of the Real Estate Council of BC, chairman of the Real Estate Errors and Emissions Insurance Corporation of BC. He became an honorary member of VIREB in 2010. Before retiring his pen in 2015, he wrote 250 monthly real estate columns for REM, the Real Estate Marketing Magazine, which is a national trade magazine for the real estate industry. Other industry involvement included serving on the Canadian Real Estate Association's Task Force on the REALTOR® Code and the Real Estate Council of BC's Trading Advisory Group. In 2018, Marty took a position with the Real Estate Council of BC as a Practice Standards Advisor. Then the Real Estate Council transitioned to the BC Financial Services Authority in 2021, where he served in the same capacity until March of 2023. Then in June of 2023, Marty was hired by the British Columbia Real Estate Association as a Professional Services Support Advisor. 

Welcome and thank you for joining me today, Marty. 

Marty Douglas: Glad to be here.

Shawn O'Hara: So what made you first get into real estate? 

Marty Douglas: Well, you know, I thought about that as one of the potential questions you might ask. And I really owe it all to my mother. I was a student at the University of Victoria, recently married in 1969, looking for work, and ran into a number of barriers in that search for work in that I was clearly a university student who was applying for jobs for the money, not for the career. And so I was getting used to being rejected. My mom had been one of the first women on Vancouver Island to get a real estate license following the new Real Estate Act introduced in 1958. And so she said, one day, your dad is taking the real estate course. Why don't you do the same? And so we did. And my dad and I passed the exam and were both licensed in 1970. We never did work together. My mom and dad did for a period of time, then they moved to Victoria. But it all started with a mother worrying about a ne'er-do-well college student getting into trouble. 

Shawn O'Hara: Oh, that's neat. So 1958, so your mother had one of the first licenses. 

Marty Douglas: Okay. She was one of the first women to be licensed under the new regime. The old regime, prior to 1958, as I was told, largely was an interview process. You went before current managers, as they then were nominees or brokers, and they quizzed you, and you paid a fee, and you got your license. And there was a series of, as I recall, real estate scandals in the 50s, which caused a rewrite of the real estate or an introduction of the new Real Estate Act, which emphasized the licensing requirements, of course, and the exam. 

Shawn O'Hara: Not unlike what we've gone through in fairly recent history. Somebody in real estate gets into trouble, the government notices and does something about it. 

Marty Douglas: Yeah, history repeats itself. 

Shawn O'Hara: Okay. And that was also the time when women were taking on other roles as well. 

Marty Douglas: Absolutely. In fact, the first brokerage my mom worked for was only women. And the owner managing broker was a lady named Lily Thulin, whose family was a pioneer in the Campbell River area. And she was the boss and she only hired women. 

Shawn O'Hara: Wow, that's neat. That would have been an interesting demographic back then. How that would be selling to women who would be the main, probably decision makers in the home and that relatability and also being before a lot of women had careers outside of the home. That's neat, the bit of historical context there. You've had a long career in real estate and in organized real estate. What do you like about it? What drives you and what motivates you? 

Marty Douglas: Well, I guess the comfortable answer is giving something back to an industry that's been very good to me, and that's part of it. But I started getting involved in organized real estate at the real estate board level long before I knew this was going to be a lifelong career. And so I think I've always been interested in governance and volunteerism right through high school and university and in real estate. And I think it is a key ingredient in the success of the real estate industry that its practitioners in many cases, obviously, within real estate boards, rule themselves. For a while, we had that on the regulator side of things, but we managed to sneak out of that responsibility. I think what I like about my position as it then was as a managing broker and as an advisor with BCFSA and now with BCREA is the opportunity to share experiences. Because as you said, history repeats itself. And in my view, there are no new problems. There are just old problems that have disguised themselves in a new format. And so frequently, we become managers and advisors like myself become storytellers of our experiences. And, you know, one of my first bosses, Randy Forbes, said that, you know, the most successful real estate salespeople are those who are good storytellers, and I think that's also true in my segment of this industry. 

Shawn O'Hara: Yeah, yes, good storytellers. Being able to explain what's going on in a relatable term and not as technical. I like that line, old problems disguised in new format. So as you were mentioning with the history way back in the 50s, there were scandals and the government did something about it. And that continues. 

Marty Douglas: Very much so. And I'm sure there's a lot more than made the headlines, but my favorite one was Van der Zalm's era as premier of the province. And he had a very large enterprise called Fantasy Gardens in Vancouver. And it was sold, I think, to an offshore group of investors. That may be hazy history. But the critical thing was that a real estate licensee who was involved in the sale later on revealed that she had met the then premier and slid him a bag of cash either over or under the table as part of the transaction. And I remember at the time I was on the real estate council and the superintendent of real estate paid us a visit and said, where was the managing broker in all of this? And so, you know, you attract the attention of the regulator or the attorney general or even a simple member of the legislature who has clout. And you bear the brunt of whatever reaction there might be, whether it's thoughtful or knee-jerk. 

Shawn O'Hara: Yeah, I remember that controversy when he sold it. Didn't he have a line like something like if he didn't think it was illegal, if nobody found out about it or something like that? 

Marty Douglas: Yeah, I think we've heard that from south of the border too. 

Shawn O'Hara: Yes. Neat. So, would it be fair to say there's been a lot more regulatory oversight in the industry not just the past few years, but certainly an increase in the past few years. Do you see that? 

Marty Douglas: Well, yeah, I don't know whether it's more. You know, we've had oversight forever, and we've created our own oversight. The Disclosure of Interest in Trade, which is required by all licensees if they are buying or renting. They're required to give that disclosure to the owner of the real estate they're either trying to buy or rent. That was first introduced, I think, in the first regime of the NDP in the 70s. And the government decided, again, this was following some event that obviously attracted their attention, that licensees have to make this disclosure in writing. But they created it on a mandatory red, pinkish-red form so it would clearly stand out in the pile of documents that a buyer was being asked to sign. The latest of, say, the last decade, regulatory changes have really been, in my view, codification of practice that we either should have or were doing. And so agency, disclosure, conflicts of interest were all practices that we were supposed to be aware of, that we were supposed to alert our clients to. And as I said, in the past decade or so, the government has and the regulator has required that those things be reduced to paper, reduced to writing and presented and kept as a record.  

The contract of purchase and sale, for example, my very first contract that I wrote back in 1970 was a single page. And that page included the commission agreement. And so if you like, you had the listing and sales contract all in one. We now have a nine-page contract and two pages of introduction information. And I believe we did that ourselves. I mean, we created the contract to follow. Perhaps regulations for example in agency disclosure but basically, the industry looked at the contract that we had decided that it could be improved upon and that's an annual occurrence resulting in the document we've got today arguably obviously more paper more pages but hopefully more enforceable and more transparent from the public point of view from our clients' point of view. 

Shawn O'Hara: Okay yeah that's ultimately the government's goal isn't it to protect consumers and to have them feel that the industry is secure and trustworthy. 

Marty Douglas: yeah, and that's always been the regulators' mandate from government whether it was the real estate council or the current BCFSA its public protection is job one and you know they protect the public by enforcing the Real Estate Services Act regulations and rules. 

Shawn O'Hara: Would you say more, not necessarily then more, regulatory oversight or a continuation? 

Marty Douglas: I think, well, based on my experience in the last couple of years at BCFSA and observing what's happening now, the government gives the regulator the authority. In rare circumstances, the government actually acts on its own, as in the rescission period legislation that was introduced. That was purely a government reaction. The legislation was government-oriented and written. Even the regulator, BCFSA, made several suggestions for amendments that were ignored. In fact, BCFSA and the industry agreed on a couple of recommendations for change that the government ignored. But the current situation that I think the last superintendent of real estate was concerned about was supervision. Supervision is an industry challenge. But for example, there's no limit on the number of real estate licensees, salespeople, that a managing broker can supervise. So if you're qualified as a managing broker, you can supervise 200 licensees or 1,000 licensees. And there are companies that have numbers that are in those ranges. Well, it's impossible for one person to do that, but the legislation would allow it. Now you're responsible for the supervision. So if you foul up, it's going to be on you. How have we allowed that to happen? I mean, the industry should have been lobbying for change. Instead, circumstances attracted the intention of the regulator, and now it's the regulator that is considering. What is the future role of the managing broker and what about supervision? And that would include things like limiting the number of licensees that a managing broker can supervise. 

I don't know what that number is. Historically, while I was on the Real Estate Council, we tried to introduce or we had a talking point on limiting the number to 55 or 60 licensees. The industry reacted poorly to that number and we never allowed to continue with the discussion to perhaps reach a number that would be a relevant number at the time. So ongoing, you know, you've got the HBRP, the Homebuyer Rescission Period legislation. We've had this running now for, it'll be two years. It was introduced to solve a problem that had already gone by, and that was the peak of the market bidding. And so there's been, although it's in daily use. in all those areas of real estate that require the rescission period. There are so few multiple offers these days that the rescission period intent was just to give buyers the opportunity to do due diligence and not step into a landmine just because they were forced to make a subject-free offer. So that period of time has passed. So the NDP has received input on that and may make modifications if there's a change. government. A new government may look at that regulation and make changes to it, but I wouldn't be optimistic. I think the HBRP is probably here to stay. 

Shawn O'Hara: Right. It's something that would not quite kick in, but be much more common in a hot market. 

Marty Douglas: Yes, I agree. By the way, the suggestion from BCFSA and BCREA was to have the period of time in advance of an offer to make a buyer, give the buyer the opportunity to do their due diligence before they made an offer and, you know, restricting the period of time that a property, before a property went on the market. So it's a difficult choice. in a buyer beware marketplace, how do you protect a consumer from basically from themselves? I mean, in the peak market, we saw people buying things that it turned out they couldn't afford because interest rates went up. It turned out they should have had a building inspection because the perimeter drains were shot. But because of the frenzy of a seller's market at the time, they felt the only choice they had was to make a subject-free offer. So HPRP was created to resolve that. But as I said, it came in too late to be effective. 

Shawn O'Hara: Right. Okay. Yeah, we will see what happens in that. Yeah, I like that concept. We protect them from themselves and rush in and think the market's going to continue to grow and increase and they have to buy now no matter what. It's interesting, you mentioned supervision and limiting the number of licensees to 55 or 60. Because when I was at the BCREA Managing Brokers Conference in one of the breakout sessions, there was some discussion on that size and the brokers who want to keep their agencies small enough, like around 40 people, because they find anything larger than that to be unmanageable. and then there's other… 

Marty Douglas: Experienced brokers are the first to admit that there is a number. And in part, it's because managing brokers are able, because of the business model, are able to be salesmen at the same time. And so, if you find, my role as a managing broker in my personal life was always a non-selling managing broker. I received compensation that was sufficient to, you know, reward the responsibility or pay for the risk that I didn't want to sell. I didn't like my experience is as a salesman anyway, so the transition to management was an easy thing for me to make. But there are many managing brokers that also have a sales career. And, you know, that's one of the challenges we'll face in the future, the declining number of managing brokers. The last count I had from last year, 43% of the managing brokers in BC and there were about 1500, over 43% of them are over 60 years old. And so they're going to be disappearing. And there are only 300 or 400 under 40 to take their place. And so if a licensee salesman qualified as a managing broker is making $150,000, $200,000, $300,000 a year selling real estate, and he's offered the honour of being a managing broker for half that income, it's not surprising that they say no. It's not surprising they say, yes, but I want to continue selling and supporting the clients that I have. And that's a distraction. And from my own experience as an advisor with the regulator, we frequently receive calls from salesmen. When we said, you know, this is really a question your managing broker should answer, they would say, well, I can't reach him. He's not in the office. He's out on a call. Worse, I don't know who he is. So that's part of the problem is the person who has the responsibility for the brokerage in all aspects isn't, in my opinion, compensated enough. The business model is broken. It's aimed at profitability for licensees first, ownership second, and if there's money left over for a managing broker. 

All too often that's how it goes. So that's a future challenge that we are going to face. And the government, the regulator has already addressed that in a study from, I think it was in 2020, the then superintendent of real estate initiated a study on the supervisory role of managing brokers. And one of the solutions they will consider is to require all licensees to obtain that level of license. In other words, the salesman or representative's license will be a stepping stone, and you will be limited in time, let's say one or two years, by which you have to take the managing broker course or the equivalent. And that would allow licensees to be fully responsible for everything they do rather than putting the managing broker in a supervisory role. If that transpires, then we will be similar to law firms. We will have a managing partner equivalent who basically will be responsible for the administration of the office and the trust accounts and will not be responsible for the day-to-day activities of the licensees. 

Shawn O'Hara: Oh, okay. That's quite a switch. 

Marty Douglas: Yes, and that idea has been around for decades. If the industry doesn't move in that direction by itself, the government has put it out on the table. This is what we're looking at. And they may very well move in that direction regardless of what the industry has to say. 

Shawn O'Hara: Okay. So the industry has to move on it or has to do something or have a position on it. 

Marty Douglas: And we're talking, you know, the inference in our conversation is you're talking about regular day-to-day sales of real estate, houses, condos, that sort of thing. But there's a significant portion of the real estate business licensing brokerage side of things that's in strata management and property management, rental property management. And they have the same challenges. You need a managing broker. You need licensees. And again, declining numbers and bigger, bigger, bigger responsibility. If you think about the number of, if you're driving around in any community, but particularly the lower mainland, but even in my town, Courtenay, we call a five-story building a high-rise tower around here, but the high-rise towers of stratas and purpose-built rentals are everywhere. And so, you know, it's the old, be careful what you wish for. The government says, we need more housing, we need more rentals. You're going to get them. You're not going to have the management ability to manage them because you've only got so many licensees that are qualified in stratas. and so many of them qualified in rental property management. They've typically been the lowest paid segment of our real estate industry, not that they're badly paid, lower, and so there hasn't been much attraction to get into the business. I know of one strata manager as an example that's managing 27 different stratas. Strata have to have an annual general meeting once a year, most of them are in January. So there's a challenge. Fit in 27 meetings in the month of January, all of which have to be at night and during the week. We don't have enough people to do that.  

Shawn O'Hara: Or enough days in the month. Wow. Okay. I guess there's two different tangents here. So one is relating to stratas and managing brokers or even just having agents. That would mean more deeper training for the agents themselves and less reliance on the broker. That'd be a longer process of education for agents, possibly fewer agents, so they become much more aware of everything that they're getting into. 

Marty Douglas: Yeah, there was a time when you got your real estate license, there were no restrictions. You were qualified for everything. You could sell commercial, you could sell residential, you could sell strata, you could sell anywhere in British Columbia. If you're from Port Hardy, you can sell in Prince George. But over time, that license was segmented into the three that we have today, trading services, housing, condos, strata management, not the sale of stratas, but the management of strata corporations and rental property management. Now you have to choose at the start of your licensing process which segment you want to go into. And I can see that expanding as it goes on. You can have a managing broker who's qualified in all three. So a brokerage doesn't necessarily need to have three managing brokers, but a brokerage can only provide services that the managing broker is qualified for so if your managing broker is qualified for only trading services then the brokerage can't manage stratas and cannot do rental property management. 

Shawn O'Hara: that's neat one thing i like about this I'm learning new stuff. It's a constantly changing field. So therefore, the managing brokers would be much more administrative. So do you see that as a direction that we could be heading? Where more trading for the individual agents? Is there a general term that would cover that? 

Marty Douglas: That would cover what? 

Shawn O'Hara: What you had mentioned, so you'd said that the system is broken, the 2020, and the concept of the more in-depth training for agents and more, just more administrative for the managing brokers. 

Marty Douglas: Well, in broad terms, it's referred to as a single license concept where everybody would have a license that would qualify them at the highest level. What educational components there are. The regulator is charged with providing the education that protects the public. And the industry picks up from that and then is responsible for education in salesmanship and motivation and all those soft skills that are required on the sales side. The regulator does not teach you how to sell a house. The regulator teaches you how to write a contract so that the public is protected. 

Shawn O'Hara: Right. 

Marty Douglas: As licensing transitions, whatever the form is at the end of the day, the education component side of it will transition with it. And we've had significant gains in education. You know, it was only in the last dozen or so years that you had to take mandatory education in order to renew your license. That's currently, I think, 18 hours of mandatory education. And you also have to take, I believe, depending on the real estate board, a minimum of 18 hours in other education that is industry supportive. So that could be salesmanship. It could be building code, building construction, strata management, all those administrative things. Those courses change. In fact, both BCFSA and BCREA are charged with education responsibilities and the courses are reviewed and introduced new material every year. So, there's an ongoing education and it is proportional between trading services and strata management and rental property management. 

Shawn O'Hara: Right, between all three. So the role of the compliance officer in a brokerage would continue under a single license concept and possibly even be more important. 

Marty Douglas: Yeah, and that's not an official position, although I think every brokerage has a compliance officer. FINTRAC, the regulator for money laundering and anti crime, requires each office to have a compliance officer. But that's not a requirement that the real estate industry is required to provide under the real estate legislation. In most cases, particularly in smaller brokerages, the managing broker will take on the role of compliance officer. But I've also seen administrators be given the role of compliance officer. Obviously, it would be a senior administrator with a lot of experience in paper that's involved around compliance. The real estate industry, the regulator, I should say, would prefer it to be a licensee because they have no control or authority, I guess is a better word, over a person who's not licensed, whereas they have lots of authority over a managing broker licensee. So, you know, in the brave new world where we're in a single license concept, we'll have a managing partner, probably still be called a managing broker and his responsibility will be administration, particularly trust account reconciliation and responsibility, and other compliances as they take on. But he will not have the responsibility of supervision of the other licensees, nor will he be held accountable unless he's involved in some aspect of a licensee's discipline charge. 

Shawn O'Hara: That's interesting. So the rregulator wants them to be licensees because of the control and influence.  

Marty Douglas: The industry model for brokerages will evolve. It has evolved over time. When my mother got into the real estate business, the multiple listing service has not yet penetrated the industry. There was no such thing as cooperation between brokerages in terms of sale of each other's listings. So, you know, we've evolved to a very mature relationship between brokerages and with the regulator, too. I think there's a lot of cooperation and mutual respect between the bodies that are responsible. Who's going to make the first step in changing the brokerage model, for example, to better compensate managing brokers or to put managing brokers purely in a supervisory mode, whether that's the government that does that or whether that's the industry, I suspect it will have to be the government. And those licensees will have to be paid in accordance with the risks that they take on. I mean, we did not have errors and omissions insurance when I started. We created the Real Estate Errors and Omissions Insurance Corporation with the cooperation of government because it was written into the Real Estate Services Act. That was recognizing the number of times that licensees and brokerages were being sued. The latest insurance policies that are available are coverage for managing brokers, for example, who are fined by the regulator. And it's not only defense, but in part, it also can be penalty insurance. And if I were to go back into the managing broker business, I would want that insurance provided for me by the brokerage to protect me because the fines now, a quarter of a million dollars, I can't, you know, I can't reach into it, a drawer and write a check for that amount of money. So, there has to be an insurance product that will cover that. That insurance is available in limited cases now, but they are also expanding that to cover real estate board penalties. You also deal with infractions of the REALTOR® code, the code of ethics. And so it's a growing business. in awareness of the risk and the responsibility. And I think that the licensing side of it will evolve. And, you know, 10 years from now, 20 years from now, you'll be doing an interview with someone, or perhaps it'll be somebody else doing interviews, and be remarking on how did we get into this position today? You know, what have we done this for ourselves? What about supervision? What about regulation? And it's quite frankly coming at us from all sides, and yet we adjust. Even the federal government gets into the act, it seems to me, on an annual basis, inventing some of the things that real estate licensees in BC and across Canada have to be aware of.  

Shawn O’Hara: Government comes up with new things, and we have to react. I think the BC real estate industry is the most heavily regulated in North America, what I understand. 

Marty Douglas: Yeah, I don't know how they measure that. But, you know, it used to be that we looked enviously at certain jurisdictions in the United States because they had what we wished we had. One of them being disclosure of agency and the ban on dual agency. Now we've got those things. Maybe we're over-regulated, but maybe we needed to be over-regulated. You'll see that Ontario is trying to catch up. 

They've introduced a bunch of regulations and legislative changes or amendments that affect the day-to-day business of licensees in Ontario. And much of what they're experiencing now, we went through five, ten years ago. So whether it's consumerism, protection, transparency, you know, we're moving in a direction, in my view, we've weathered and climbed any of the hills that have been put in front of us successfully, and, look ahead. We don't think there's a plateau coming. Probably just won't change. And I think we'll be well able to weather that. New licensees in BC, they have no idea what it was like two years ago, five years ago, because they're brand new. So when they see an eight page contract, or a four page disclosure of representation, or a disclosure of interest in trade or disclosure to the seller of expected remuneration, they think, Oh, great, look at all these rules. They're not a burden. Assuming they stay in the business, they'll become the leaders and the example and the success stories that the future industry will be quite proud of. 

Shawn O'Hara: Yeah, they're very willing because they don't have the history to go on. They're willing to embrace, I guess that's the phrase I'm looking for. They're very willing to embrace what's there because for them, that's the way it is. So in some sense, it's a matter of time, too, as the older ones cycle out or as they get out of the industry, because it's not like the old times and then newer ones come along. 

Marty Douglas: I agree. 

Shawn O'Hara: If you end up setting the size of an agency, that might cause there to be more agencies. I don't know. We don't know what the... 

Marty Douglas: There are a lot of people who are qualified to be a managing broker, but they aren't. They're an associate broker, and they're selling real estate in their own part. You want to compensate them for the risks that they're taking on, but if you have a large brokerage, and many current brokerages do have multiple managing brokers, or they have a managing broker with a number of associate brokers underneath, that have responsibilities assigned to them specifically. So, you know, providing the qualification, qualified people are there, and provided they're willing to take on the responsibility, you know, the solution's right in front of us in terms of brokerage, whether it's a big brokerage or a small one. I'm more concerned about replacing the stock of managing brokers that we have. 

Shawn O'Hara: Right. The older ones the ones that we retire out right because there there goes a wealth of experience ton of experience. And the time that it takes to train the newer ones. Wow. Interesting. I've been taking a lot of notes as well. We’ll see how this podcast evolves, too, over time as I get different guests and different issues come up and so on. 

Marty Douglas: Yeah. I'm sure you'll have a following. 

Shawn O'Hara: Yes. Marty, is there a certain charity or nonprofit that you would like to mention? 

Marty Douglas: My favorite local charity is called the Comox Valley Child Development Association. And when I thought about the opportunity that your podcast is giving me, I thought, well, you know, that's local and I might be talking province-wide. So then I just Googled Child Development Association and discovered that there were child development associations throughout British Columbia, almost always local community, not affiliated in any way. And they're there, my Child Development Association is there to support children with developmental problems and also their families. Locally, they hold a telethon once a year. They raise $100,000, $150,000 or thereabouts from the local community. And they do incredible work and provide tremendous facilities. So if you're desperate for a charity to support. If you haven't given any thought, as a real estate licensee giving back to the community, you should be involved in charitable works and community good works. And if you need to find a charity, I would highly recommend you look around for a charity that's involved with children. And Google in your local area, child development, and I'm sure you'll find something that's worthwhile. Thank you for the opportunity, Shawn. I appreciate it. 

Shawn O'Hara: Thank you, Marty. And that's it for today. Thank you.