Agency Relationship

When a real estate brokerage represents a seller, it must do what is best for the seller of a property.

The listing agreement, also called the written contract, creates an agency relationship between the seller and the brokerage. This agreement then establishes the seller representation. It also explains services the brokerage will provide and establishes a fee arrangement for the REALTOR®'s services. The agreement also specifies what obligations a seller may have.

When it comes to the seller's agent, they must tell the seller anything known about a buyer. For example, if a seller's agent knows a buyer is willing to offer more for a property, that information must be shared with the seller.

The information that a seller shares with a seller's agent must be kept confidential from potential buyers and others.

Confidential information about the seller cannot be discussed. However, a buyer working with a seller's agent can expect fair and honest service from the seller's agent. This includes the disclosure of pertinent information about the property.

The real estate brokerage representing a buyer must do what is best for the buyer.

The written contract also called a buyer representation agreement, creates an agency relationship between the buyer and the brokerage. It establishes buyer representation and it also explains services the brokerage will provide. This agreement establishes a fee arrangement for the REALTOR®'s services and specifies what obligations a buyer may have.

Buyers will usually 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.

There are occasions when 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 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.

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. It also encourages REALTORS® to obtain written acknowledgment of that disclosure.

The Code also requires REALTORS® to submit written representation and customer service agreements to buyers and sellers.

For additional information about working with a REALTOR® please see my Working with a REALTOR section and/or you may download the

OREA Working with a REALTOR® brochure