The Code of Ethics is administered by the Real Estate Council of Ontario (RECO), the licensing and regulatory body for real estate practitioners in this province, requires registrants to disclose in writing the nature of the services they are providing and encourages them to obtain written acknowledgement of that disclosure.
For REALTORS®, this disclosure is usually done with the aid of an Ontario Real Estate Association (OREA) brochure entitled Working with a REALTOR®, the Agency Relationship. The brochure includes a tear-off statement that the consumer signs and the REALTOR® retains as proof that disclosure was made. Signing the statement does not obligate the consumer in any way. It just serves as proof that the REALTOR® has discussed the matter with the consumer.
Why is this important?
You need to know for whom the REALTOR® is working. Is it you . . . or is it the other guy? Suppose you call a real estate brokerage about a property you saw on mls.ca and end up working with the REALTOR® who answered the phone. You might think that he is your sales representative because you contacted him. However, unless you agree to enter into a Buyer’s Agency Agreement with him, he is actually working for the Seller whose property you’re interested in. He’s obliged to be fair to you and not misrepresent anything about the property in question, but he does not owe you the fiduciary duties of a sales representative. Wouldn’t you want to know that?
Types of Agency
In real estate, there are three kinds of agency relationship: Seller’s Agency, Buyer’s Agency & Multiple Agency.
Seller’s Agent:
When a real estate brokerage is a “Seller’s agent,” it must do what is best for the Seller of a property.
A Seller’s REALTOR® must tell the Seller anything he or she knows about a Buyer. For instance, if a Seller’s REALTOR® 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 REALTOR®, however, must be kept confidential.
A Buyer can expect fair service and disclosure of pertinent information about a property from the Seller’s REALTOR®. Nothing will be misrepresented about a property. All questions will be answered honestly.
Buyer’s Agent:
A real estate brokerage acting as a “Buyer’s agent” must do what is best for the Buyer. A written contract establishes Buyer agency. It also explains what services the REALTOR® will provide and spells out who will pay and what obligations to the REALTOR® a Buyer may have. Typically, Buyers will be obliged to work exclusively with that REALTOR® for a period of time.
A REALTOR® working for a Buyer will keep information about the Buyer confidential from the Seller.
Multiple Agent:
Occasionally a real estate brokerage and its sales representative will represent both the Buyer and Seller. Under this multiple agency arrangement, the REALTOR® must do what is best for both the Seller and Buyer. In a case of multiple agency, strict procedures must be followed. A REALTOR® can represent only if both the Buyer and Seller agree in writing.
n.b. RECO’s Code requires registrants to enter into a written agency agreement with any sellers or buyers they are representing. This means that, if you want a REALTOR® to represent you, you must enter into a contract with him or her.
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Source: London and St. Thomas Association of REALTORS®
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