The Agency Relationship
The Agency Relationship
An agent is legally obligated to look after the best interests
of the person he or she is working for. The agent must be loyal
to that person.
How Does This Relationship Work?
A REALTOR may be your agent - if you have clearly established an
agency relationship with that REALTOR. 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 to understand what
it means.
In real estate, there are three different forms of agency relationship:
1. Vendor's Agent
When a real estate company is a vendor's agent, it must do what
is best for the vendor of a property. A vendor's agent must tell
the vendor anything about a purchaser. For instance, if a vendor's
agent knows a purchaser is willing to offer more for a property,
that information must be shared with the vendor. Confidences a vendor
shares with a vendor's agent must be kept confidential. A purchaser
can expect fair service and disclosure of pertinent information
about a property. Nothing will be misrepresented about a property.
All questions will be answered honestly.
2. Purchaser's Agent
A real estate company acting as a purchaser's agent must do what
is best for the purchaser. A written contract establishes purchaser
agency. It also explains services the REALTOR will provide, spells
out who will pay and specifies what obligations a purchaser may
have. Typically, purchasers will be obliged to work exclusively
with that REALTOR for a period of time. A REALTOR working for a
purchaser will keep information about the purchaser confidential
from the vendor.
3. DualAgency
Occasionally a real estate company will be the agent of both the
purchaser and the vendor. Under this dual agency arrangement, the
REALTOR must do what is best for both the vendor and the purchaser.
Your agent will discuss dual agency during conversations dealing
with representation and provision of service. A REALTOR can be a
dual agent only if both the purchaser and vendor agree in writing.
Who Pays?
Usually, the REALTOR will be paid from the proceeds of the sale.
The listing agreement states the REALTOR's fee. When more than one
REALTOR is involved, often a purchaser will work with one REALTOR
and a vendor will work with another. It may appear that the REALTOR
working with the purchaser is working for that purchaser, in an
agency relationship. That is not necessarily the case.
The REALTOR working with a purchaser may be a sub-agent of the
vendor. In this case, the REALTOR is actually a vendor's agent.
While a vendor's agent can provide many valuable services to a purchaser,
he or she must do what is best for the vendor. If a written contract
exists with a purchaser, a REALTOR can be a purchaser's agent. Purchaser's
and vendors will always be told - in writing - who a REALTOR is
working for.
Honesty and Integrity
Most real estate professionals in our province are members of the
Ontario Real Estate Association (OREA) - and only members of OREA
can call themselves REALTOR. When you deal with a REALTOR, you can
expect not only strict adherence to provincial laws, but also adherence
to a Code of Ethics. And that code is very important to you - because
it assures you will receive the highest level of service, honesty
and integrity.
Highest Professional Standards
Before receiving a real estate license, candidates must successfully
complete an extensive course of study developed by OREA on behalf
of the Ontario Government. And that is only the beginning: in the
two years after receiving their license, the new professionals are
required to successfully complete three additional courses as part
of their articling with an experienced broker.
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