WANT TO BUY OR SELL A PROPERTY?
Working with a REALTOR® – The Agency Relationship {Part 2}
There are a lot of documents that will require your signature when you are buying or selling a home. Having a trusting relationship with your REALTOR® is an invaluable asset, but you still need to know & understand what it is you are signing!
This is Part 2 for learning about the different relationships (a.k.a. Agency Relationship) you can have with a REALTOR® & what they mean for you.
Part 1 took a look at the difference between a Client & a Customer.
Missed part 1? Find it here!
Some of my clients ask me to just “get to the good stuff”… We wouldn’t be doing our jobs (what you are paying us to do!) if we let you blindly sign documents without ensuring you understand your options & helping you choose what best suits your needs.
BUYER AGENCY:
Is a relationship where the Brokerage (company) & it’s REALTORS® exclusively represent the interests of the Buyer. A formal Buyer Agency relationship is established when a Buyer Agency Agreement is signed.
This contract outlines:
- Who the Buyer (s) are
- The Brokerage (company) who will represent the Buyer
- The time period that the REALTOR® will exclusively be representing the Buyer (which is negotiable)
- Property types that the REALTOR® will be helping the Buyer find
- Geographic location the REALTOR® will be looking
- Any commission agreements the Buyer & REALTOR® decide upon (negotiable as well & it is still common that the Seller will pay the Buyer’s agent in our market)
- Holdover period (the amount of time after the REALTOR® introduces the Buyer to a property that a Buyer will be responsible for the commission outlined above)
- The responsibilities of both Buyer & REALTOR® while the contract is binding
What you can expect from your REALTOR® in a Buyer Agency relationship:
- Find properties that meet the Buyer’s requirements
- Discuss the pros & cons of properties – relay any defects
- Keep Buyer’s information confidential
- Professional negotiation skills
- Provide Fiduciary Duties to the Buyer – good faith, full disclosure, competence, obedience & accounting
Seller AGENCY:
Is a relationship where the Brokerage (company) & it’s REALTORS® exclusively represent the interests of the Seller. A formal Seller Agency relationship is established when a Listing Agreement is signed.
This contract outlines:
- Who the Seller (s) are
- The Brokerage (company) who will represent the Seller
- The time period that the REALTOR® will exclusively be representing the Seller (which is negotiable)
- Price that the home will be offered for sale for
- Commission that the Seller will pay the REALTOR® for successfully selling their home (a negotiable item)
- Holdover Period (the amount of time a Seller will have to pay a commission should the Buyer be introduced while the time period outlined was in effect)
- Commission to Cooperating Brokerage (Buyer’s REALTOR’s® company)
What you can expect from your REALTOR® in a Seller Agency relationship: (for many, these services will be negotiable based on the commission a Seller agrees to – Full Service vs. Discount)
- Seek qualified buyers
- Market the home for sale (varies based on each REALTOR® & their services)
- Seller information confidentiality
- Determine any defects & explain any that need to be disclosed to protect the Seller from liability after the sale
- Professional negotiation skills
- Provide Fiduciary Duties
to the Buyer – good faith, full disclosure, competence, obedience & accounting
Dual AGENCY:
Is a relationship where the Brokerage (company) & it’s REALTORS® represent the interests of the Seller & the Buyer in a transaction. A formal Dual Agency relationship is established when a Confirmation of Cooperation (where dual agency is selected) has been signed.
This contract outlines:
- Consensual understanding from both Seller & Buyer that the Brokerage is representing both of them
- Brokerage & it’s REALTORS® will be impartial – protect both the Seller & Buyer interests equally
- Duty to fully disclose any factual information to both Buyer & Seller — with the exception of: Seller’s willingness to accept less than listing price, Buyer’s willingness to pay more than offer price, Motivation for Buying or Selling, Price that a Buyer should offer or Seller should accept, Shall not disclose terms of any other offers to Buyer (multiple offer situation)
- The REALTOR® can reference comparable properties or market information to assist Buyer & Seller to arrive at their own conclusions
Sub-AGENCY:
Is a relationship where the Brokerage (company) & it’s REALTORS® may act on behalf of another REALTOR’s® client. Sub-agency relationships usually occur when a REALTOR® is showing a client houses prior to establishing a Buyer Agency relationship — in this case they would be working on behalf of the Seller & providing the Buyer a Customer Service relationship.
If you’ve made it this far, way to go! You now have a solid understanding of the different relationships you can have with your REALTOR® & are now in a position to make decisions that are best for you.
Wait! Before you sign that contract:
There are several key terms to note when committing to an Agency Relationship & you will want to ensure they are clearly outlined within the contracts.
- Services to be provided
- Fees or Commissions & who will pay them
- Length of the contract
- Any stipulations if the contract expires (hold over period)
- Other terms & conditions that are important to you
Here is brochure created by the Ontario Real Estate Association which outlines the relationships in detail & is often one of the documents that you will be required to sign if you decide to use a REALTOR®.
If you have any questions or would like more insight into these relationships or real estate in general, reach out! We love to help
Keeping it Genuine,
The Edwards Team
The Genuine Blog
