REIC CEO: Real estate needs to raise the bar on ethics

The real estate industry has spent years talking about raising professional standards.

Don Inouye thinks it’s time for more action. 

“For five years I’ve heard every real estate leader say, ‘We need to raise the bar, we need to raise the bar, we need to raise the bar,’” said Inouye, CEO of the Real Estate Institute of Canada (REIC). “Well, let’s just do it then.”

That’s one of the main ideas behind The Pulse 2026: An Ethics Pulse Check in Canadian Real Estate, a new REIC report based on discussions with 174 real estate professionals, association leaders, regulators, educators, appraisers, property managers and others.

It doesn’t shy away from some uncomfortable issues. Compensation structures, licensing standards, industry governance and the growing role of AI all come under the microscope.

‘They’re not ready’

One of the bigger questions in the report is what happens to the role of a real estate professional when consumers can find much of the information they need themselves.

Property data is more accessible and AI can increasingly answer questions that once required an industry professional. REIC’s report says that puts more weight on what technology can’t easily replace, like judgment, accountability and fiduciary responsibility.

So, is the industry ready for trust and good judgment to become a bigger part of what agents are selling?

“They’re not ready,” Inouye said. “They say they are, but they’re not ready.”

Part of the problem, he believes, is structural. Real estate associations depend on members and their dues, while significantly raising professional standards could mean fewer people in the industry.

“What’s best for the organization is not what’s best for the industry,” he said.

“What’s best for the industry would be smaller groups with smaller membership with a higher barrier to entry, paying higher dues with higher requirements and an obvious high standard in ethics and legal expectation–period.”

The compensation question

Compensation was another recurring issue in the report.

Participants pointed to the tension created when an agent has a duty to act in a client’s best interests, but only gets paid if a transaction happens. The report stresses that commission-based compensation isn’t inherently unethical, but says the structure can create subtle biases.

“The reason why there’s persistent ethical tension there is because it’s structural. When you have a compensation model that is predicated entirely on—like, how much you sell is how much you eat—we have to expect it.”

He believes other compensation models could emerge in Canada like they are beginning to in the United States, including arrangements where buyers and their agents negotiate payment upfront, as opposed to it being determined by the cooperation between brokers on the sell side.

‘What’s the harm?’

Then there’s the question of who gets into the business in the first place. The report found strong concern that licensing standards don’t match the responsibility real estate professionals are given, pointing to low barriers to entry, inconsistent standards between jurisdictions and limited post-licensing supervision, among other issues.

Asked whether the barriers to becoming and remaining a real estate agent are too low, Inouye said, “100 per cent.”

He sees the issue through a consumer protection lens rather than what he calls an “industry preservation lens.”

“What’s the harm in raising the minimum standard?” he said.

“If we’re going to empower an industry and we’re gonna start calling people a profession or professions, then they have to act accordingly and they have to be held accountable accordingly.”

A bill of rights

One of REIC’s proposed solutions is a national real estate client bill of rights.

The recommendation would set out rights around informed consent, choice of representation, compensation transparency, conflict disclosure, professional competence and fair treatment.

But Inouye says raising standards also requires being willing to talk openly about why they’re needed.

“A lot of people want to advocate for more ethics in the industry, but they don’t want to admit how bad the industry is first,” he said. “You’ve got to know where you’re starting from if you want to get where you’re going.”

For Inouye, the stakes are getting higher as technology changes what consumers need from real estate professionals.

“They’re gonna have to go out and they’re gonna have to demonstrate that this is legitimately a profession, because if they don’t, it’s gone.”

That, he said, means being able to show consumers what professionalism actually looks like.

“We just have to demonstrate this is what it means to be a real estate professional. This is what it means to be ethical. This is what it means to be transparent.”

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