Agency Relationships

When working with a REALTOR®, it is important to understand who the REALTOR® works for, and to whom the REALTOR® is legally obligated to. The Canadian Real Estate Association (CREA) requires that the REALTOR® discloses Agency Relationship to a potential client at the earliest time possible.

What is a Buyer’s Relationship with a REALTOR®? What’s the difference between a Client and a Customer?

As a Client, a real estate company acting as a “Buyer’s Agent” must do what is best for the buyer. A written contract, called a Buyer Agency Agreement, establishes buyer agency. It also explains services the company will provide, establishes a fee arrangement for the services provided by the REALTOR® and specifies what obligations a buyer may have. Under such agency, a buyer will be obligated to work with that company for a period of time. In return, confidence a buyer shares with that company will be kept confidential. The REALTOR is also required to offer processional advice, negotiate the best price for the buyer and provide the buyer with as much information required to make the right decision.

As a Customer the buyer can expect to be treated fairly and honestly. It is important for the buyer to realize that under such a relationship, the REALTOR® is technically a sub-agent of the seller, so that duties are owed to that seller. However, the buyer can expect the REALTOR® to disclose all pertinent information about a property, not to misrepresent any facts, and to honestly answer all questions about the property. Under such relationship with the buyer, the REALTOR® must not imply that they shall negotiate a price for the buyer as that would be a direct conflict with the REALTOR’s sub-agency relationship with the seller and a violation of our rules and regulations.

What is a Seller’s Relationship to a REALTOR®?

A real estate company must do what is best for the seller of a property. A written contract, called a Listing Agreement, establishes seller’s agency. It also explains services the company will provide, establishes a fee arrangement for the REALTOR’s services and specifies what obligations a seller must have. Confidence a seller shares with their REALTOR® must be kept confidential from potential buyers and others. That REALTOR® must tell the seller anything known about the buyer. For instance, if the REALTOR® knows that a buyer is willing to offer more for a property, that information must be shared with the seller. A seller must understand that a REALTOR® working with a buyer as a sub-agent is ultimately working with the seller’s best interest in mind. A REALTOR working with a buyer, as a Buyer Agent, is working for the buyer’s best interest in mind, but may still be compensated by the seller through provisions made to the Listing Agreement.

What does Dual Agency Mean?

Occasionally a real estate company will be the agent for both the buyer and the seller. The buyer and seller must consent to this arrangement in their listing and buyer agency agreements. Under this “multiple representation” arrangement, the company must do what is best for both the buyer and seller. Since the company’s loyalty is divided between the buyer and seller who have conflicting interest, it is absolutely essential that a multiple representation relationship be established in a written agency agreement. This agreement specifically describes the rights and duties of everyone involved and any limitations to those rights and duties.