A real estate brokerage
representing the interests of the
buyer. Buyer agency can be
established by implication, as well
as a written agreement/contract.
Buyers seeking exclusive
representation usually do so through
an agency agreement. This
relationship is the counterpart of
seller agency with the same agency
principles and practices applying.
A representative of the buyer
must use professional negotiation
skills, seek appropriate properties
that meet the buyer’s needs,
describe the merits and defects of
any selected property, keep
information confidential concerning
the buyer, and generally act in the
buyer’s best interests. The
hallmarks of this relationship are
good faith, full disclosure,
competence, obedience, and
accounting. The buyer and the
brokerage will enter into a signed
buyer agency agreement that details
their relationship. The exact title
of the buyer agency agreement will
vary by provincial jurisdiction,
e.g., Buyer Agency Agreement and
Exclusive Buyer’s Brokerage
Contract.
The seller usually pays all
commission to the listing brokerage
who, in turn, forwards the
appropriate portion to the buyer’s
brokerage. Alternatively, the
buyer’s brokerage can be paid
directly by the buyer and,
therefore, this amount does not form
part of the sale proceeds. In most
transactions, the commission to the
buyer’s brokerage is paid via the
listing brokerage from the proceeds
of the sale. Payment procedures for
the payment of commission will vary
by provincial jurisdiction.
Dual
Agency
The same brokerage has an agency
relationship with both the buyer and
the seller in a real estate
transaction. Dual agency also occurs
when different salespeople represent
buyer and seller, and are employed
by the same brokerage, including
those who work in different branch
offices. The brokerage or its
representatives must advise the
seller and the buyer of the dual
aspect of representation and must be
impartial when representing both
parties. Both buyer and seller must
give their informed consent to this
form of representation.
Implied
(Unintended) Dual Agency
The real danger with dual
agency lies not so much with
expressed agency, which can be
largely remedied through proper
procedures, but rather with implied
dual agent relationships. In an
expressed, fully disclosed
relationship, the brokerage and its
representatives can, in fact,
represent both buyer and seller if
the terms and responsibilities are
clearly understood and agreed to by
both parties in advance, through
informed consent. With unintended
dual agency, no formal document
exists. Such duality arises when a
brokerage or salesperson
inadvertently represents two parties
or unwittingly works on both sides
of the transaction.
Limited Dual Agency
Procedures, including
variations found in provincial
jurisdictions and individual
brokerages, have generated
considerable discussion. Most
concerns centre on the issue of
confidentiality and loyalty owed to
the seller that conflicts with the
same duties owed to the buyer. In
some jurisdictions, rules and
procedures have been imposed by
legislation and/or the appropriate
regulatory body limiting duties owed
to both buyer and seller under such
circumstances. Generally, limited
dual agency sets out procedures
regarding:
Non-disclosure of the price
that either party is prepared to
pay the other.
Non-disclosure of the
motivation of either buyer or
seller.
Non-disclosure of the terms
of competing offers.
Not disclose personal or
financial information unless
authorized.
Not represent the interest
of the buyer over the seller (or
vice versa).
Undisclosed Dual Agency
This situation arises when a
professional is found to be acting
in an agency role for conflicting
interests without prior approval,
understanding, and agreement of the
parties. The results may have
serious consequences including
forfeiture of commission, discipline
by a local board or regulatory body,
punitive or exemplary damages, and
possibly the loss of salesperson or
broker license/registration. The
broker and/or manager who is
responsible for the activities of
the sales force may also be at risk.
Seller Agency
Establishes a relationship in
which the brokerage and its
salespeople represent the interests
of the seller exclusively.
Sellers typically give authority
to a brokerage to sell their
property by signing a listing
agreement/contract that establishes
a formal agency relationship between
the seller and the real estate
brokerage. This agreement/contract
sets out what the seller instructs
the brokerage to do and what
services are provided under seller
agency. Further, it provides that
representatives of the seller will
use their professional negotiation
skills to seek qualified buyers and
generally promote the listed
property, while keeping information
concerning the seller confidential
and always acting in the seller’s
best interests. The hallmarks of
this relationship are good faith,
full disclosure, competence,
obedience, and accounting. The
seller has traditionally paid a
commission directly to the agent.
The listing agency then pays any
brokers or salespeople within its
employ and, if applicable, any
co-operating brokerages involved in
the transaction.
Single Agency
A relationship between a seller
or buyer and an agent wherein the
agent is considered in law to
represent only the principal.
Agents owe principals their
primary allegiance, including good
faith and full disclosure,
competence, obedience, and
accounting. Single agency is to be
differentiated from dual agency in
which the same agent has an agency
relationship with both the seller
and the buyer in the same real
estate transaction. With the rise of
buyer agency, the term single agency
is sometimes used to refer to
brokerages that only work with
either buyers or sellers. For
example, a brokerage dealing only
with buyers and not offering agency
services to sellers is referenced in
certain jurisdictions as being a
single buyer brokerage.
Sub-Agency
An agency relationship whereby
an individual is empowered by an
agent to act on behalf of a
principal of that agent.
The sub-agency concept extends
to the authorization of co-operating
brokerages to work on behalf of the
seller. Traditionally, Multiple
Listing Services were based on the
automatic offering of sub-agency by
the listing broker to all other
members of the real estate board.
The use of subagency has gradually
diminished given the growing
popularity of buyer agency.
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