Legally, an agent is one who is authorized to act for another. When buying or selling real estate, the critical question to ask is “Whose agent are you?”
For sellers, it is relatively straightforward. Once a listing contract is signed, the seller and the real estate company have created an agency relationship. On behalf of the seller, the real estate agent will protect the seller’s interests in the transaction. This includes working to get the best terms and conditions, keeping confidential the seller’s personal information such as the lowest price they will accept, and advising the seller of market conditions affecting the sale of their property.
It is not so straightforward for buyers. When a buyer calls an agent about a particular property – perhaps from a sign on the property or an ad in the paper – in most cases that agent has signed a listing agreement with the seller. That means the agent is working to obtain the best deal for the seller, not the buyer. Buyers generally have not understood this concept. For that reason, in the mid-nineties, the Canadian Real Estate Association added an “agency disclosure” requirement to the Code of Ethics.
Code of Ethics Article 3 A REALTOR shall fully disclose in writing to, and is advised to seek written acknowledgment of disclosure from all parties to a transaction regarding the role and the nature of service the REALTOR will be providing to the client versus the customer or other party to the transaction. The REALTOR shall also disclose his or her role to the other REALTORS involved in the transaction.
In most places in Canada, a buyer can work with his/her own buyer agent in a real estate transaction. A buyer agent will strive to obtain the best deal for the buyer; keeping confidential the buyer’s personal information such as the highest price they are willing to pay for the property and advising the buyer of terms and conditions that should be included in the offer to purchase.
Province-by-province, there is some variation in the way the agency system works. The first order of business for a buyer when engaging in conversation with a REALTOR is to ask, “Whose agent are you?”