The Agency Relationship

When working with a Realtor, it is important to understand who the Realtor works for. To whom is the Realtor legally obligated?

What to expect from a Realtor...

• Honesty and Integrity
  Most real estate professionals in our province are members of the Ontario Real Estate Association (OREA) - and only members of OREA can call themselves REALTORS. When you work with a Realtor, you can expect not only strict adherence to provincial laws, but also adherence to a Code of Ethics. And that code is very important to you - because it assures you will receive the highest level of service, honesty and integrity.
• Highest Professional Standards
  Before receiving a real estate licence, candidates must successfully complete an extensive course of study developed by OREA on behalf of the Ontario Government. And that is only the beginning: in the two years after receiving their licence, the new professionals are required to successfully complete three additional courses as part of their articling with an experienced broker.

Realtors are governed by the legal concept of "agency". An agent is legally obligated to look after the best interests of the person he or she is working for. The agent must be loyal to that person.

A Realtor may be your agent - if you have clearly established an agency relationship with that Realtor. But often, you may assume such an obligation exists when it does not. Realtors believe it is important that the people they work with understand when an agency relationship exists and when it does not - and to understand what it means.

In real estate, there are different possible forms of agency relationship:

• Vendor's Agent
  When a real estate company is a "vendor's agent", it must do what is best for the vendor of a property. A vendor's agent must tell the vendor anything known about a purchaser. For instance, if a vendor's agent knows a purchaser is willing to offer more for a property, that information must be shared with the vendor. Confidences a vendor shares with a vendor's agent must be kept confidential. A purchaser can expect fair service and disclosure of pertinent information about a property. Nothing will be misrepresented about a property. All questions will be answered honestly.
• Purchaser's Agent
  A real estate company acting as a "purchaser's agent" must do what is best for the purchaser. A written contract establishes purchaser agency. It also explains services the Realtor will provide, spells out who will pay and specifies what obligations a purchaser may have. Typically, purchasers will be obliged to work exclusively with that Realtor for a period of time. A Realtor working for a purchaser will keep information about the purchaser confidential from the vendor.
• Dual Agent
  Occasionally a real estate company will be the agent of both the purchaser and vendor. Under this "dual agency" arrangement, the Realtor must do what is best for both the vendor and the purchaser. A dual agent must fully disclose information to both the purchaser and vendor. No information will be confidential. A Realtor can be a dual agent only if both the purchaser and vendor agree in writing.

Who Pays?
Usually, the Realtor will be paid from the proceeds of the sale. The listing agreement states the Realtor's fee.

When more than one Realtor is involved
Often, a purchaser will work with one Realtor and a vendor will work with another. It may appear that the Realtor working with the purchaser is working for that purchaser, in an agency relationship. That is not necessarily the case. The Realtor working with a purchaser may be a "sub-agent" of the vendor. In this case, the Realtor is actually a vendor's agent. While a vendor's agent can provide many valuable services to a purchaser, he or she must do what is best for the vendor. If a written contract exists with a purchaser, a Realtor can be a purchaser's agent. Purchasers and vendors will always be told - in writing - who a Realtor is working for.