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In real estate,
there are different possible forms of
agency relationship:
1. Seller's Agent
When a real estate company is a
“seller's agent,” it must do what is
best for the seller of a property. A
written contract, called a listing
agreement, establishes seller agency. It
also explains services the company will
provide, establishes a fee arrangement
for the Realtor's services and specifies
what obligations a seller may have.
A seller's agent must tell the seller
anything known about a buyer. For
instance, if a seller's agent knows a
buyer is willing to offer more for a
property, that information must be
shared with the seller. Confidences a
seller shares with a seller's agent must
be kept confidential from potential
buyers and others. Although confidential
information about the seller cannot be
discussed, a buyer working with a
seller's agent can expect fair and
honest service from the seller's agent
and disclosure of pertinent information
about the property.
2. Buyer's Agent
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 Realtor's
services and specifies what obligations
a buyer may have. Typically, buyers will
be obliged 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.
3. Dual Agent
Occasionally a real estate company will
be the agent of both the buyer and the
seller. The buyer and seller must
consent to this arrangement in their
listing and buyer agency agreements.
Under this “dual agency” arrangement,
the company must do what is best for
both the buyer and the seller. Since the
company's loyalty is divided between the
buyer and the seller who have
conflicting interests, it is absolutely
essential that a dual agency
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.
Who's working for you?
It is important that you understand who
the Realtor is working for. For example,
both the seller and the buyer may have
their own agent which means they each
have a Realtor who is working for them.
Or, some buyers choose to contact the
seller's agent directly. Under this
arrangement the Realtor is working for
the seller, and must do what is best for
the seller, but may provide many
valuable services to the buyer.
A Realtor working with a buyer may even
be a "sub-agent" of the seller. Under
sub-agency, both the listing agent and
the co-operating agent 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
dual agency and the Realtor is working
for both the seller and the buyer.
Code of Ethics
Realtors believe it is important that
the people they work with understand
their agency relationship. That's why
agency disclosure is included in a
self-imposed Code of Ethics which is
administered by the Real Estate Council
of Ontario. The Code requires Realtors
to disclose in writing the nature of the
services they are providing, and
encourages Realtors to obtain written
acknowledgement of that disclosure. The
Code also requires Realtors to enter
into a written agency agreement with any
sellers or buyers they are representing.
Realtors 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 real estate company may
be your agent – if you have clearly
established an agency relationship with
that Realtor. But often, you may assume
such an obligation exists when it does
not. Realtors believe it is important
that the people they work with
understand when an agency relationship
exists and when it does not -- and
understand what it means.
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