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What Happens When The Same Brokerage Represents Both The Buyer and a Seller?

Posted by Sherry Rioux on November 1, 2016

buyer and seller green sign

Maybe I should say, what DOESN’T happen in this scenario? It’s all about disclosure as you’ll see below.

As a real estate buyer, chances are you assume that your “agent” is representing you. If you have entered into a Buyer Agency Agreement, chances are that is correct.  But first let’s define the word AGENT.  When you enter into either a Buyer Agreement or a Listing Agreement, the contract is with the Brokerage and it is the Brokerage who is your agent.  The physical person you are dealing with is your salesperson and not your agent.  So, it is not uncommon that you may be interested in a property that is also listed by the same Brokerage as the one you have hired to represent your interests.  So what happens in this case?

When two parties both have contracts in effect with the same brokerage, this is known as dual or multiple representation. The rules in this case are pretty clear within the real estate industry and, they have been heavily promoted, publicized and discussed with the public for years and years yet few people seem to know the answer.  In all cases, your salesperson must discuss this issue of agency relationship with you and explain the various forms of representation.  In all cases, the nature of the agreed upon representation must also be disclosed in writing to all parties in a transaction and further, the parties must consent in writing to this form of representation.  The specifics can be found in this Registrar’s Bulletin issued by the Real Estate Council of Ontario (RECO).

In practical terms, multiple representation limits some of the information that can be shared with the parties as the obligation on the REALTOR® is treat each party impartially and to equally protect the interests of both the Buyer and the Seller. While this includes disclosing all factual information about the property that is known to the Brokerage, the Brokerage cannot disclose:

  • That the seller may or will accept less that the listed price unless otherwise instructed in writing by the seller
  • That the buyer may or will pay more than the offered price, unless otherwise instructed in writing by the seller
  • The motivation of or personal information about the buyer or seller, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice;
  • The price the buyer should offer or the price the seller should accept and,
  • The Brokerage shall not disclose to the buyer the terms of any other offer.

On November 4th, CBC will air an episode on Marketplace, complete with hidden camera videos,  featuring unethical real estate practices uncovered while investigating multiple representation.

In my view, this is a good thing.  I agree fully with our industry representatives that salespeople who are not telling the truth about this important issue to consumers must be strongly condemned and punished as these cases put the reputation of our profession at risk and undermine both consumer confidence and protection.

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