Buyer Agency – How It Affects Buyers
Agency Relationship Explained!
When working with a Real Estate Agent, there are different forms of relationships. All Canadian Real Estate Brokers and Salespersons are required to inform consumers of their options when working with a Realtor. Traditionally in Ontario, before Buyer Agency Agreements became an informed option, buyers of residential real estate had “Customer” relationships with Realtors. Since the Seller was paying the fee, the agent owed a fiduciary duty to the Seller. While the Buyer was treated as a Customer, the Seller was treated as a Client. The agent was obligated to perform their duties in a manor that favoured and protected the interests of the Seller/Client.
Today, more and more Buyers are seeing the obvious benefits of “Client” status, and are entering into Buyer Agency Agreements with Realtors. As a Client, the agent is working for the Buyer and owes their fiduciary duty to the Buyer.
A written contact called a Buyer Agency Agreement between the Buyer and the company establishes “buyer agency”. It also explains the services the company will provide, establishes a fee arrangement (if any), for the Realtor’s services and specifies what obligations the Buyer may have. Typically, Buyers will be obliged to work exclusively with that company for a period of time. 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. Typically, the Buyer’s agent is paid by the Seller’s agent, through the MLS system, and there is no cost to the Buyer.
If a Buyer chooses to have a “customer” status, and not enter into a Buyer Agency Agreement, then the Realtor working with a Buyer will 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 a dual agency and the Realtor is working for both the Seller and the Buyer.
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’s 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. Dual Agency can result when the Listing Realtor is working with both the Buyer and the Seller, or when any other Realtor from the same company is representing the Buyer.
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“I had the pleasure of working with Jessica as my real estate broker, and I couldn’t be happier with the experience. From the moment we began our search for a new home, Jessica demonstrated an unparalleled level of professionalism, expertise, and dedication.” – L.L.
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