After reading this article, “BC couple ‘tricked’ into buying unlivable house” I really felt for the BC couple and decided to write this blog/article to address the different agency relationships between REALTORS® and the public. From the article, the BC couple was told that they were in a customer relationship which they thought meant that the REALTOR® was working on behalf of their best interests. I hope the information below will help to clarify some questions you may have about agency relationships:
First of all, your REALTOR® should offer you the “Working with a Realtor” brochure, explain these agency relationships with you and obtain your initials stating that you have read and understand the brochure.
There are 3 types of agencies. Here’s a brief description of each.
DESIGNATED AGENCY: REALTOR® represents client A. He is to represent client A just like a lawyer or doctor represents client A. Fiduciary duty, full disclosure, confidentiality, client’s best interests, loyalty towards client A and perform all due diligence related to real estate transactions client A has asked the realtor to perform. Designated agency is classified as a CLIENT RELATIONSHIP.
LIMITED DUAL AGENCY: Suppose REALTOR® represents client A to sell client A’s home. Customer B walks into the home, doesn’t have a REALTOR® representing him/her, decides to buy the home and wants to write an offer. Client A’s REALTOR® can represent both the buyer and the seller but ONLY with both the buyer and seller’s written approval. In this way, the REALTOR® can have a CLIENT RELATIONSHIP with customer B, provide fiduciary duty, full disclosure, confidentiality, etc… There are a few limitations of course. The REALTOR® cannot disclose (without permission) a few things to either clients including:
– client A’s personal information to client B or vice versa
– whether the buyer is willing to pay any other price other than what’s listed on the contract
– whether the seller is willing to sell at any other price other than what’s listed on the contract
– client A’s motivation to sell AND client B’s motivation to buy
A limited dual agency also occurs if the REALTOR® wants to represent 2 buyers wanting to buy the same property and in addition to above, the REALTOR® cannot disclose (without permission) the amount or terms of one offer to the other buyer.
Limited dual agency is classified as a CLIENT RELATIONSHIP.
NO AGENCY: If customer B walked into the house, wanted to buy, but client A did not allow the REALTOR® to have a limited dual agency or customer B did not want the realtor to represent him/her, customer B can either hire another REALTOR® to represent him/her or ask for a NO AGENCY RELATIONSHIP which means that client A’s REALTOR® will write up the offer and contract for customer B, but offer NO advice or professional opinion regarding price or negotiations, etc…
No agency is classified as a CUSTOMER RELATIONSHIP.