It is important to understand who the realtor works for and who the Realtor is legally obligated to.
In Canada, the (CREA) Canadian Real Estate Association requires any Realtor to disclose the Agency relationship to the potential client as the earliest possible time.
Buyers Relationship to REALTORS®
The Realtor offers the buyer two relationships. The Buyers Agent, the real estate company acting as their agent, must accommodate what is best for the buyer. The Buyer Agency Agreement is a written contract that establishes the buyer agency. This agreement will explain the service provided by the company, it outlines the fee arrangement for the Realtor’s service and what obligation a buyer may have. Under the agency the buyer will be in agreement to work with that company for a specified period of time. The company in return confides to the buyer that information shared will be kept confidential. The Realtor is required to negotiate the best price for the buyer and offer professional advice with as much information necessary to help make the right decision.
The buyer as a customer, will be treated fairly and honestly. The buyer under this relationship with the Realtor is technically the sub-agent of the seller to the duties are owed to the seller. The buyer should expect the Realtor will disclose all information pertinent to the property, will not misrepresent any facts and will answer the questions about the property honestly. The Realtor should not imply that they negotiate a price for a buyer as this is a direct conflict with the Realtor sub-agency agreement with the seller and would be a direct violation of the rules and regulations.
Sellers Relationship to REALTORS®
The confidence a seller shares with their Realtor is to be kept from potential buyers and must be kept confidential. The real estate company is required to do what is best for the seller of a property. The Realtor must disclose to the seller anything that is known about the potential buyer. Example, if a Realtor knows that a buyer will pay more for a property, the information should be shared with the seller.
The written contract called the Listing Agreement, will establish the seller agency. It will explain the services provided by the company , the fee arrangement for the Realtor and the obligations a seller must have.
The seller should understand that the Realtor working with a potential buyer, as a sub-agent, is working with the sellers best interests. The Realtor working with the buyer, as their agent, is working for the buyers best interests, even though compensated by the seller through the listing agent provisions.
There are times when the real estate company will be the agent for both the seller and the buyer. Seller and buyer do consent this arrangement in the listing and buyer agency agreement. This arrangement is called multiple representation, and the company agrees to do what is best for both the seller and the buyer.
The company now has loyalty divided between seller and buyer with conflicting interests. It is essential that a multiple representation relationship be established in the written agency agreement. This specifically describes the duties and the rights of all involved and the limitations to such.
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