At law, agency is a specific relationship between two or more people. One person must authorize the other person to act on his/her behalf, and the other person must consent to do so. In other words, when you authorize a REALTOR® to work for you in buying or selling a property and the REALTOR® agrees, you and the REALTOR® are in an agency relationship. As a member of the public, you are probably familiar with working with individual REALTORS®. However, the agency relationship is actually between you and the REALTORS® brokerage. The brokerage is the real estate company, its branch offices and all of the salespeople. Therefore, when you hire your REALTOR®, the law of agency says that you hire the entire brokerage.
Seller Representation
In Seller’s Agency, a real estate company represents only the interests of the seller. Sellers typically hire a real estate company to sell their property by signing a Listing Agreement (Authority of Sale or Lease)This is the Contract which establishes the formal agency relationship between the seller and the real estate brokerage.
The Listing Agreement will explain exactly what the seller instructs the Seller’s Brokerage to do, what services the Seller’s Brokerage will provide to the seller, who will pay for those services and what obligations the seller will have.
Buyer Reprentation
The Buyer representation agreement works in favour of buyers, guaranteeing the very best in real estate service.
The Real Estate Council of Ontario (RECO), a public agency formed to protect consumers and regulate the industry, introduced guiding principles mandating that REALTORS® ask their clients to sign a Written Representation Agreement at the earliest possible time.
When choosing representation, homebuyers have the option to sign either a Buyer Representation Agreement or a Buyer Customer Service Agreement.
The Buyer Representation Agreement signifies that for a designated period of time, the buyer has engaged a specific REALTOR® firm to work exclusively on his or her behalf at finding a property. The agreement confirms the REALTOR®’s commitment to make his or her best efforts for the buyer.
By comparision, signing the Buyer Customer Service Agreement the buyer acknowledges the Broker has provided him/her with written information explaining agency relationships including Seller Representation, Sub-Agency, Buyer Representation, Dual Representation and Customer Service.
Dual Representation
Dual representation occurs when the same REALTOR® in under contract with both the buyer and the seller in the same real estate transaction. It also occurs when different REALTORS® work for the buyer and seller if those REALTORS® are employed by the same real estate company (brokerage) even if they work at different branch offices of that brokerage.
When dual agency occurs, the brokerage’s duties of confidentiality and loyalty to the seller conflict with the same duties to the buyer. Therefore, the Saskatchewan Real Estate Association has proposed certain rules and limitations to deal with dual agency situations.
The limitations of dual representation are:
- the REALTOR® will not disclose that the buyer will pay a price or agree to terms other than those contained in the offer, or that the seller will accept a price or terms other than those contained in the Listing Agreement.
- the REALTOR® will not disclose the motivation of the buyer to buy or the seller to sell unless authorized.
- the REALTOR® will not represent the interest of either the buyer or the seller to the advantage of one over the other.
- the REALTOR® will not disclose personal or financial information of either the buyer or the seller unless authorized in writing.
- the REALTOR® shall disclose to the buyer all material defects about the physical condition of the property known to the REALTOR®.
- all "comparable" property information may be disclosed to both the seller and buyer at any time.
The brokerage shall disclose the dual representation to the buyer at the earliest possible time before an offer (Agreement of Purchase and Sale) on the property is signed by the buyer. The brokerage shall disclose the dual agency to the seller at the earliest possible time before presenting that offer (Agreement of Purchase and Sale) to the seller for acceptance.
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