The 3 Different Forms of Agency Relationship (Vendor)

Realtors work under a strict Code of Ethics. One provision of that code requires Realtors to seek written acknowledgement, both from home buyers and home sellers, that they understand the agency relationship. An agency relationship is created where one person, known as the principal, asks another person, known as the agent, to act for and on behalf of the principal. In a real estate transaction, an agency relationship is formed between the brokerage firm (including all its licensees) and the principal through the services of a Realtor. There are basically 3 different forms of Agency Relationship under which a purchaser might be brought to you by another Realtor:

The agent may may be working with the purchaser as a Seller's Agent

Or the purchaser may be working with the purchaser as a Buyer's Agent

If a purchaser is brought to you by another Realtor who is a Buyer's Agent and is also working for Royal City Realty (Dufferin) Ltd, then the relationship is termed Dual Agency.

If a purchaser's agent has what is termed a "special relationship" with a client, such as a relative, close friend, business associate, or past (real estate) client, then this relationship must be disclosed to you, and you will be asked to acknowledge in writing that you are aware of this relationship.

Let's take a look at the differences between these 3 forms of agency relationship.

1. Seller’s Agent

Under the MLS (Multiple Listing Service) system, a Realtor working with a seller offers to co-operate in the sale of that property with other Realtors. A co-operating Realtor, who is not a Buyer's Agent, then becomes a "sub-agent" of the listing Realtor. That means co-operating Realtors bringing a buyer to you are actually agents of the vendor (you), and must represent the best interests of the vendor (you). In this case, the following codes apply:

You, as the vendor, will be the purchasing Realtor's Client, and the buyer will be his or her Customer.

The purchasing Realtor must maintain confidentiality of all information that may be discussed with you, the vendor.

The purchasing Realtor must disclose to you, the vendor, any pertinent information that the buyer may share with him or her (eg: if the buyer has indicated a willingness to offer a higher price).

2. Buyer’s Agent

The offer may be brought to you by a Buyer’s Agent. In this case, the purchasing Realtor has a signed agreement with the buyer stating that he or she will be working directly for the buyer. In this case, the codes apply as follows:

The purchasing Realtor is bound by written agreement to represent the buyer's best interests.
The purchasing Realtor's Client will be the buyer.
Any pertinent information the buyer shares with the purchasing Realtor must be kept confidential

3. Dual Agency

If an offer is brought in by either myself, or a Royal City (Dufferin) Ltd sales representative, then my broker is obligated to look after the best interests of both the buyer and the seller. This is called Dual Agency and in this case both listing and purchasing Realtors owe full or limited disclosure to the buyer and the seller. Whether this will be full disclosure or limited disclosure is a matter for agreement by both parties.

In a Dual Agency situation, the aim remains the same, and that is to bring together a willing purchaser and a willing seller to complete a transaction.

4. How is the commission determined?

Usually a Seller’s Agent, as a sub-agent for the vendor, earns a fee or commission from the vendor paid out of the transaction.

The fee of a Buyer’s Agent is agreed between the purchaser and the Realtor, and could be paid directly by the buyer or paid from the transaction

Payment for a Dual Agent will be agreed upon in contracts between the Realtor, the vendor and the purchaser.

Back to Top of Page

Royal LePage RCR Realty

75 First Street Suite 14, Orangeville, ON, L9W 2E7
Phone: (519) 925-1776
Toronto Line: (800) 483-7740
Pager: (519)-941-5151
Fax (519) 925-1533
.
Website by Power Train
http://www.agenthelp.com
1-800-483-7740
.