One of the primary responsibilities of any reputable Real Estate Sales Representative is to provide a clear explanation of the role that each party will play in your real estate transaction. This is called disclosure.
Disclosure is required under the Codes of Ethics of both the Real Estate Council of Ontario (RECO) and the Canadian Real Estate Association (CREA). It is not only necessary, but beneficial. It builds trust and confidence with both the Seller and Buyer, cements business relationships, and advances consumer knowledge. Sellers and Buyers must be informed who is working FOR and WITH whom, and they must acknowledge in writing that they have been informed.
REALTORS® are governed by the legal concept of “agency,” the relationship between principal and agent (master and servant) wherein the agent is considered in law to represent the principal.
- When a real estate brokerage 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 brokerage will provide, establishes a fee arrangement for the REALTOR’s services, and specifies what obligations a Seller may have.
- A Seller’s Real Estate Sales Representative must tell the Seller anything known about a Buyer. For instance, if a Seller’s Real Estate Sales Representative 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 Real Estate Sales Representative 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 Real Estate Sales Representative can expect fair and honest service from the Seller’s Real Estate Sales Representative and disclosure of pertinent information about the property.
- A real estate brokerage acting as a “Buyer’s Agent” must do what is best for the Buyer.
- A written contract, called a Buyer Representation Agreement, establishes Buyer Representation. It also explains services the brokerage 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 brokerage for a period of time.
- Confidences a Buyer shares with the Buyer’s Real Estate Sales Representative must be kept confidential.
- Although confidential information about the Buyer cannot be disclosed, a Seller working with a Buyer’s Real Estate Sales Representative can expect to be treated fairly and honestly.
- Occasionally a real estate brokerage 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 Representation Agreements. Under this “Dual Agency” arrangement, the brokerage must do what is best for both the Buyer and the Seller.
- Since the brokerage’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.
- (Jeff Greenberg does not practice this type of Dual Agency.)
- A real estate brokerage may provide service to Buyers and Sellers without creating Buyer or Seller Agency. This is called “Customer Service.”
- Under this arrangement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a Buyer or Seller customer service agreement.
In all scenarios, when you deal with a REALTOR, you can expect the strict adherence not only to Provincial Laws, but also to a Code of Ethics. It assures that you will receive the highest level of service, honesty and integrity.