REALTORŪ's are governed by the legal concept of "agency". An agent is legally obligated to look after the best interests of the person he or she is working for. The agent must be loyal to that person.
A REALTORŪ may be your agent if you have clearly established an agency relationship with that Realtor. We as REALTORŪ's believe it is important that the people we work with understand what an agency relationship is.
In Real Estate, there are different possible forms of agency relationship: Seller Agency, Buyer Agency, and Dual Agency. It's important that you understand these relationships, should you consider to buy or sell any real estate. Be sure you have us explain agency law to you so that you completely understand the relationship, if any, you may have with the agents involved. Buyers and Sellers will always be told, in writing, who a Realtor is working for.
It is best for you to have a contract up front with any agent working for you so that your best interests are looked after. The following are descriptions provided by the Ontario Real Estate Association.
A real estate brokerage representing a buyer must do what is best for the buyer. A written contract, called a buyer representation agreement, creates an agency relationship between the buyer and the brokerage, and establishes buyer representation. It also explains services the brokerage will provide, establishes a fee arrangement for the Realtor's services and specifies what obligations a buyer may have. Typically, buyers will be obligated to work exclusively with that company for a period of time. Confidences a buyer shares with the buyer's agent must be kept confidential. Although confidential information about the buyer cannot be disclosed, a seller working with a buyer's agent can expect to be treated fairly and honestly.
Occasionally, a real estate brokerage will be the agent of both the buyer and the seller. The buyer and seller must consent to this arrangement in writing. Under this "multiple representation" arrangement, the brokerage must do what is best for both the buyer and the seller.
Since the brokerage's loyalty is divided between the buyer and the seller who have conflicting interests, it is absolutely essential that a multiple representation relationship be properly documented. Representation agreements specifically describes the rights and duties of everyone involved and any limitations to those rights and duties.
A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called "customer service".
Under this agreement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a buyer or seller customer service agreement.
Real estate negotiations are often complex and a brokerage may be providing representation and/or customer service to more than one seller or buyer. The brokerage will disclose these relationships to each buyer and seller.
Who's working for you?
It is important that you understand who the REALTORŪ is working for. For example, both the seller and the buyer may have their own agent which means they each have a REALTORŪ who is working for them.
Or, some buyers choose to contact the seller's agent directly. Under this arrangement the REALTORŪ is working for the seller, and must do what is best for the seller, but may provide many valuable services to the buyer.
A REALTORŪ working with a buyer may even be a sub-agent of the seller. Under sub-agency, both the listing brokerage and the cooperating brokerage must do what is best for the seller even though the sub-agent may provide many valuable services to the buyer.
If the seller and the buyer have the same agent, this is multiple representation and the REALTORŪ is working for both the seller and the buyer.
Code of Ethics
REALTORŪ's believe it is important that the people they work with understnad their agency relationship. That's why requirements and obligation for representation and customer service are included in a Code of Ethics which is administered by the Real Estate Council of Ontario.
The Code requires REALTORŪ's to disclose in writing the nature of the services they are providing, and encourage the REALTORŪ's to obtain Written acknowledgement of that disclosure. The Code also requires REALTORŪ's to submit written representation and customer service agreements to buyers and sellers.
Advantages of Buyer Agency: Buyer representation allows your REALTORŪ to:
- Protect and represent your best interests.
- Explain the process & access your needs.
- Fully disclose to you all the pertinent facts about a given property.
- Supply Financing options.
- Keep information about you (the buyers) confidential from the seller.
- Act as a skilled negotiator.
- Buyer Representation is established through a written contract between the Buyer and a REALTORŪ.