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Agency Relationship

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.

For more information, take a read of the actual “Working with a REALTOR® brochure” HERE and Feel free to contact me if you have any further questions.

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