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UBC Theses and Dissertations

Structure and organization of the real estate brokerage industry Seto, Suzanna

Abstract

The major objective of the present study is to analyze the real estate brokerage industry in British Columbia with respect to its organization, structure, and conduct. The industry has been criticized for overly high real estate commission rates, an excessively large sales force which contributes to high turnover, heavy competition leading to unethical practices and low wages for some salesmen. These allegations led to a provincial inquiry that was to examine many of the problems faced by the industry. The federal government created further controversy with the enactment of the new Combines Investigation Act. The Act prohibited the setting of minimum or fixed commission rates that had been a traditional practice of the real estate industry. In view of the public concern over issues relating to real estate, the present study proposes to examine the basic structure and performance of the industry so that one may have a clearer understanding of the problems that it faces. The study utilizes two approaches to investigate the current situation of the industry. On the one hand it encompasses a statistical survey of real estate agents and salesmen in British Columbia, and on the other it uses primary and secondary sources to analyze the conduct of the industry. The statistics concerning the real estate industry is derived mainly from three surveys conducted during the summer of 1975. The real estate brokerage industry in British Columbia has reached a period when many changes are needed to revitalize its operations. Since the industry has always been a self-regulatory system, these changes would be most effective if they are initiated from within. Until now, the industry has not made any serious attempts to instigate new policies which will improve the relation of agents and salesmen, to curb the size of the sales force by using responsible hiring practices, or to encourage more comprehensive brokerage services by endorsing a. flexible commission rate system. Many of the criticisms mentioned above can be corrected by concerted effort of industry leaders. The recommendations made by the present study are directed toward the brokerage industry and deals with many of the aforementioned issues. The writer believes that reforms must be instigated soon, before lack of public confidence in the industry necessitates government intervention.

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