Who is 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 REALTORS® who is representing them. Or some buyers choose to contact the seller's agent directly. Under this arrangement the REALTORS® is representing the seller, and must do what is best for the seller, but may provide many valuable customer services to the buyer.
A REALTORS® working with a buyer may even be a "sub-agent" of the seller. Under sub-agency, both the listing brokerage and the co-operating brokerage must do what is best for the seller even though the sub-agent may provide many valuable customer services to the buyer.
Code of Ethics
The Code of Ethics which is administered by the REAL ESTATE COUNCIL OF ONTARIO (RECO) oversees that all REALTORS® meet the requirement and obligations for representation and customer services.
The Code of Ethics requires REALTORS®, at the earliest practical opportunity, 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 submit written representation and customer service agreements to buyer and sellers.
A real estate brokerage representing a buyer must do what is best for the buyer. A written contract, called a Buyer Representation Agreement, creates an agency relationship between the buyer and the brokerage, and establishes buyer representation. It also explains services the brokerage will provide, establishes fee arrangement for the REALTORS®'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.
The real estate brokerage owes the buyer various fiduciary duties including: accountability, confidentiality, competence, good faith, full disclosure, loyalty and obedience. 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.
When a real estate brokerage represents a seller, it must do what is best for the seller of a property. A written contract, called a listing agreement, creates an agency relationship between the seller and the brokerage and establishes seller representation. It also explains services the brokerage will provide, establishes a fee arrangement for the REALTORS®'s services and specifies that obligations a seller may have.
The real estate brokerage owes the seller various fiduciary duties including: accountability, confidentiality, competence, good faith, full disclosure, loyalty and obedience. 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 disclosed, 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.
Occasionally a real estate brokerage will represent both the buyer and the seller. The buyer and seller must consent to this arrangement in writing. Under this multiple representation 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 multiple representation relationship be properly documented. Representation agreements specifically describe the rights and duties of everyone involved and any limitations to those rights and duties.
A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called “customer service”.
Under this agreement, 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. Real estate negotiators are often complex and a brokerage may be providing representation and/or customer service to more than one seller or buyer. The brokerage will disclose these relationships to each buyer and seller.