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Agency Explained

On January 1, 1995, the Canadian Real Estate Association clearly defined the Realtor Code of Ethics:

The member shall fully disclose in writing to, and seek written acknowledgement of disclosure from, all parties to a transaction regarding the existence of a member's agency relationship and the nature of the service the member will provide to the client versus the customer or other party to the transaction. The member shall also disclose to other members involved in the transaction whether the member is representing the vendor, the purchaser, or some other party to the transaction.
(Article 3).

Agent Obligations

When working with a Realtor, it is important to understand who the Realtor works for and to whom the Realtor is legally obligated.

The traditional real estate arrangement has a listing agent with a listing agreement with the vendor/seller and a selling agent (co-operating agent) who works with potential buyers.

The listing agent markets the property using whatever sales and advertising methods are needed to get their vendor the best price for their property.

The buyer's agent works with the buyer to find the buyer the right home in the right price range.

It is assumed that the buyer's agent is working for the buyer and putting the buyer's best interests first. In reality both agents are paid commission on the sale of the home and from a legal perspective the listing agent AND the selling agent represent the seller.

For instance if you are a buyer and one of our Buyer Specialists show you a home listed by another agent, we are representing either:

  • the seller as a sub-agent to the listing agent
  • or you, the buyer, if we have agreed to a buyer agency agreement.

In order to address the potential conflict of interest the Canadian Real Estate Association has introduced a mandatory disclosure procedure that clearly spells out the duties and responsibilities of both the listing agent and the selling agent.

This disclosure procedure commits:

  • the listing agent to work solely in the best interests of the vendor/seller.
  • the buyer's agent to work solely in the best interests of the buyer

As professional real estate sales representatives, we want our customers and clients to know what our legal, moral and ethical responsibilities are. See "FAQ's" for more tips on what to look for in a great Realtor.

Seller's Agent

A Real Estate company (REALTOR) may be an agent of the SELLER/ the VENDOR. In this case the Realtor:

  • represents the best interests of the seller/vendor; has a formal contractual relationship with the seller through a "listing" agreement; must keep the vendor informed of any information that could influence the vendor's decision, such as to accept or reject an offer to purchase; must maintain the confidentiality of information discussed with the vendor;
  • Is obligated to share with the vendor any information offered by the buyer. For instance if the Realtor knows that the buyer is willing to offer a higher price the Realtor must share that information with the vendor

The Realtor must also disclose all pertinent information about the home and be sure that nothing about the home is misrepresented to the buyer. If I show you a house under the traditional relationship, I am acting as an agent for the seller and I have a legal obligation to the seller. If I am acting as a Sub-Agent of the listing broker, I am obligated to share with the seller, any information offered by you the buyer. As a customer, you are entitled to honesty, integrity and any information about the property pertinent to your consideration.

Buyer's Agent

A Real Estate company (REALTOR) may be an agent of the BUYER. In this case the Realtor:

  • represents the best interests of the buyer;
  • has a formal relationship with the buyer, for a given period of time, through a written contract which commits the buyer to work exclusively with the Realtor and commits the Realtor to work on behalf of the buyer;
  • keeps the buyer informed of any information that could influence the buyer's decisions, such as the value of comparable homes;
  • maintains the confidentiality of information discussed with the buyer and is not under any obligation to share that information with the seller;
  • assists a buyer in determining how much the buyer can afford to spend on a home;
  • will help the buyer complete the forms for an offer to purchase the home;
  • is obligated to share with the buyer any information offered by the seller. For instance if the seller states that they are under pressure to move by a certain date the buyer's agent must share that information with the buyer

Under the terms of a buyer's agreement:

We have a clear and direct responsibility to act in your best interest. We are not obligated to share with the seller any information we discuss. You have an obligation to work exclusively with us for the term of our agreement. Does this restrict you from buying any house that you like? ... The answer is no. For instance if you drive by an open house, and you decide to view it, and you fall in love with the house, all it takes is one phone call and we will work with you to place an offer for the house and to negotiate the best price and the best terms for you. See "Our Commitment" for details on the benefits of working with Buyer Specialists from the Sylvia Morris Selling Team.

Dual Agency

Occasionally a real estate company will be the agent of both the vendor and the purchaser. This is called "dual agency".

As a "dual agent" the Realtor is obligated to represent the best interests of both the buyer and the seller.

If the sales representative is showing a home that has been listed by their office they are in a "dual agency" relationship. The sales representative owes full disclosure of the dual agency to both the buyer and the seller. Any confidential information shared with the sales representative by the buyer or the seller must be shared with both parties. Under a dual agency relationship it is important to understand that the sales representative has a legal obligation to share all information with both parties.

Our objective as sales representatives is to bring together a willing seller and a willing purchaser to complete the sale of a property and to maintain high ethical standards.

Who gets paid for services?

The Seller's Agent
The Seller's agent receives a fee or a commission from the seller of the property. This fee is clearly specified in the listing agreement.

The Buyer's Agent
In most cases the Buyer's Realtor will be paid a commission by the seller from the proceeds of the sale.

 

What to expect from your Realtor

1.Seek a licensed "Realtor". A "Realtor" is a real estate professional who is a member of the Toronto Real Estate Board (TREB), Ontario Real Estate Association (OREA) and the Canadian Real Estate Association (CREA).

You can expect strict adherence to provincial law as well as to a national code of ethics - ensuring you'll receive the highest level of service, honesty and integrity.

2. Current and up-to-date Education credentials from the Ontario Real Estate Association, to improve skills and keep current with rapid changes in real estate law, market conditions and financing.

"Realtors" must successfully complete extensive courses developed by OREA. This emphasis on education and training means that when you deal with a "Realtor", you're working with an individual who cares about your needs and can provide you with sound, effective counselling and professional service.

3. A clear explanation of "Agency" Representation - Who does a Realtor work for?

In Ontario real estate, the relationship between the broker and the buyer or seller is called "Agency" representation. By law, there are three types of agency relationships: vendor agency, buyer agency and dual agency. You should clearly understand these relationships, who works for who, so that your best interests are represented. Agreements such as a "Listing Agreement" or "Buyer Agency Agreement" is intended to protect your interests, as well as those of the Realtor you have selected.

4. Meet with you to review your list of needs and wants in a home.

It makes sense to choose a Realtor you feel comfortable with - someone who listens to what you have to say, asks intelligent questions and shows a genuine interest in helping you. By listening to you, the Realtor can save you a lot of unnecessary time looking at homes that are not right for you.

5. Help you determine the price range you can consider by facilitating the financial Pre-Qualification or Pre-Approval process. Understands financing alternatives and has current knowledge of interest rates and mortgage options.

Provide you with referrals to professional financial advisors eg. Mortgage Broker(s), Lenders will "get the game in play" and is the first step in the home buying process. Pre-Qualification or Pre-Approval enables you to shop for a home you can afford, eliminates disappointment, and increases your negotiation power when you are ready to make an offer.

6. Conduct a preliminary search to match your needs, and review a broad range of possible homes either in the Realtor's office, or via email.

Realtor's have direct access to the Multiple Listing Service (MLS), which provides details on a wide variety of properties in the markets you're exploring. Use this time to focus on the features of homes that match your "Must Haves" and "Need to Haves" to narrow the search.

7. Has considerable knowledge of market values, especially the properties available in your price range and homes that will match your individual needs. Answer your questions about the market(s) you're interested in, and help you compare homes and features.

It is the Realtor's responsibility to know these markets thoroughly and to stay on top of new home listings as they occur, so you don't miss out on the home that might be the right fit.

8. Pre-inspect the best matching properties.

You should only be shown homes that fit your budget, and match the list of needs and wants you've communicated - it's a great time saver.

9. Make appointments to show you potential homes and escort you to the properties.

House hunting is not a process that should be rushed. Knowing how long it will take and how many houses you will need to see are different for every buyer. It is recommended to look a few rather than many. If you and the Realtor have done your homework, ideally you should only have to visit a handful of homes to make an informed and wise decision.

10.Provide documentation of each property and disclose all facts concerning the home.Answer all your questions about the homes until you're satisfied.

11.A Realtor can also provide a comparison of homes that have sold recently in the area, to enable you with market knowledge and help you make an informed decision.

A good way to remember features of each home is to note them in writing. This will be especially helpful for homes with the greatest potential, since nothing beats a written record.Use the House Hunting Worksheet in addition to the MLS listing from the Realtor.

12. Draws up the Offer, and provides sound advice to protect your best interests.

Explaining the Agreement of Purchase and Sale is an essential step for understanding what to offer and why. The Realtor's knowledge is invaluable regarding the components of the contract, including deposits, purchase price, clauses, irrevocability, completion dates, examining title, chattels included, involving your lawyer, the impact of the market and the negotiation process. The Realtor will take into account all the factors that are important to you and recommend terms, conditions and clauses that best represent your interests. Under Buyer Agency Agreements, you are protected since the Realtor is liable for any errors.

13. Present the offer and Negotiate for the best terms and conditions for you under current market conditions.

The Realtor should explain the negotiation process and the possible outcomes such as counter offers, acceptance, rejection, and multiple offer situations. Buyer Agency Agreements ensure that your Realtor will not disclose your motivation (your reason for purchasing) or the price you are willing to pay, unless you have instructed him/her to do so in writing.

14. Ensure that all documents are completed and the transaction closes smoothly.

Most legal documents, following acceptance of the offer, will be processed by your Lawyer, however it is reassuring to know that your Realtor will monitor the process from the offer to closing, to ensure the transaction closes without any problems.

15. Communicate regularly with you at your convenience.

Nothing is more frustrating than not hearing from someone regarding your needs, or not knowing what to expect. Make sure you ask and agree on how often the Realtor will keep you up-to-date.