Working with a REALTOR® – The Agency Relationship {Part 1}
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 post is going to delve into the different relationships (a.k.a. Agency Relationship) you can have with a REALTOR® & what they mean for you.
“When working with a REALTOR®, it is important to understand who the REALTOR® works for. To whom is the REALTOR® legally obligated?”
-OREA Working with a REALTOR®
We are governed by a legal concept referred to as agency
– this is a legal obligation to look after the best interests & be loyal to the people we represent.
It is important to note that any agency agreements you sign are with the Brokerage (company) that the REALTOR® works for & not the person themselves.
What are the possible relationships you can have with a realtor®?
You have the choice of becoming a
CLIENT or CUSTOMER.
In a BUYER AGENCY, SELLER AGENCY, DUAL AGENCY, SUB-AGENCY or CUSTOMER SERVICE relationship .
Client Relationship:
When you enter into a Client relationship with a REALTOR® {through a Buyer Representation Agreement or Listing Agreement for Sellers} your interests are protected & the REALTOR® owes you fiduciary (legal) duties:
- Full Disclosure/Good Faith – honesty of intention & abstention from taking advantage
- Accountability – ensure that all transactions comply with Ontario regulatory requirements & provide full accounting of funds held in trust upon request
- Confidentiality – cannot use information acquired from Client for any purpose likely to cause harm or interfere (not to be confused with responsibility to disclose material facts or defects)
- Competence – REALTOR® must have sufficient knowledge, the skill to carry out required duties & will make reasonable efforts to determine/disclose any material facts to their Client.
- Loyalty – the interests of the Client are placed above all else within the limitations of the law & the REALTOR® will act in the best interest of their Client at all times
- Obedience – duty to follow a Client’s instructions within the limitations of the law whether the REALTOR® agrees with them or not.
Although a REALTOR® may have entered into a Client relationship with you, they must still treat all parties in the transaction with fairness, honesty, and integrity.
CUSTOMER Service relationship:
If a Buyer or Seller does not wish to be under contract as a client they can create a customer service relationship. The obligations of a REALTOR® to a customer are very different than a client:
- Ethical duty to deal fairly, honestly & with integrity (obligation to all parties in a transaction regardless of relationship)
- Exercise competence when answering questions & providing information
- Avoid misrepresentation
- Restricted level of service – showing property, drafting documents, presenting an offer, etc.
It is vitally important to understand that should the Brokerage (company) a REALTOR® works for have a Client relationship with the other party in a transaction, their fiduciary duty is to the Client & protecting their best interests.
This can be a lot to take in, however it is important you understand what your option are & what you are agreeing to. Contracts are binding & it is our responsibility to ensure you understand what you are signing.
READY TO TAKE ON PART 2? Learn More about the specific relationships here…
Keeping it Genuine,
The Edwards Team
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®.
Keeping it Genuine,
The Edwards Team
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®.
The Genuine Blog
