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Lee Taylor
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REALTORS® are governed by
the legal concept of “agency.”
An agent is legally obligated
to look after the best interests
of the person he or she
represents. The agent must
be loyal to that person.

A real estate brokerage may
be your agent – if you have
clearly established an agency
relationship with that REALTOR® with a representation
agreement. But often, you
may assume such an obligation exists when it does not.

REALTORS® believe it is important that the people they
work with understand when
an agency relationship exists
and when it does not – and
understand what it means.

When working with a
REALTOR®, it is important
to understand who the
REALTOR® works for.
To whom is the REALTOR®
legally obligated? 

Most real estate professionals in our province are members
of the Ontario Real Estate Association (OREA) and only
members of OREA can call themselves REALTORS®.

When you work with a REALTOR®, you can expect
strict adherence to provincial laws, which includes a
Code of Ethics. That code assures you will receive
the highest level of service, honesty and integrity.

Highest Professional Standards

Before receiving a real estate registration, candidates
must successfully complete an extensive course of study
developed by OREA on behalf of the Real Estate
Council of Ontario. That is only the beginning: in the
first two years of practice, registrants are required to
successfully complete three additional courses as part of
their articling with an experienced broker. In addition,
all registrants must continue to attend courses throughout their                                  careers in order to maintain their registration.
 

The Agency
Relationship


In real estate, there are
different possible forms of
agency relationship:

1. Seller Representation
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 REALTOR®’s services and
specifies what obligations a seller may have.

A seller’s agent must tell the seller anything known
about a buyer. For instance, if a seller’s agent 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 agent 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
agent can expect fair and honest service from the seller’s agent and disclosure of pertinent information
about the property.

2. Buyer Representation
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 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 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.

3. Dual Representation
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.

4. Customer Service
A real estate brokerage may provide services to buyers
and sellers without creating buyer or seller representation. 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.

Real estate negotiations 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.

This brochure is for information only and is not a contract.
For the purposes of this information, the term “seller” can be interpreted
as “landlord” and “buyer” can mean “tenant.”


Who's 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
REALTOR® who is representing them.

Or, some buyers choose to contact the seller's
agent directly. Under this arrangement the
REALTOR® is representing the seller, and must
do what is best for the seller, but may provide
many valuable customer services to the buyer.

A REALTOR® 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.

If the brokerage represents both the seller and
the buyer, this is multiple representation.

Code of Ethics

REALTORS® believe it is important that the
people they work with understand their agency
relationship. That’s why requirements and obligations for representation and customer service are
included in a Code of Ethics which is administered by the Real Estate Council of Ontario.

The Code requires REALTORS® 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 buyers and sellers.


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