The Real Estate & Business Broker’s Act of 2002, states:
Best Interests - A registrant shall promote and protect the best interests of the registrant’s clients.
O. Reg. 580/05, s. 4.
This regulation along #3 (Fairness, honesty, etc.), #5 (Conscientious and competent service, etc.) & #6 (Providing opinions, etc.) comprise just a few of the obligations that each registered real estate agent & all brokerages must adhere to when acting as an agent for clients & customers in the course of trading real estate in Ontario.
On first glance, it may seem like common sense that an agent would be fair, honest, conscientious,
competent & work always in their clients best interests, but it is becoming ever more evident that many buyers & sellers do not truly understand what their Realtor’s obligations are to them during their transaction or don’t ever hold their agent to them.
This usually results from buyers & sellers focusing more on the “sales” statistics of an agent they are interviewing to help them.
Instead of asking questions like,
Why do you work in this industry?
What processes do you have in place to ensure your clients success?
Tell me about how you navigate challenges face through transactions & What services does your commission fee include?
People tend ask:
How many homes did you sell last month/year?
What are your specific sales stats?
How long have you been in this business? & How much will you reduce your commission for me?
Now each of these questions have merit when choosing a Realtor, as you don’t want one who operates sporadically in the business, but you also definitely do not want a “sales machine” because they may not provide you the one-on-one service you are going to NEED during this stressful time. Toronto’s market is beyond crazy, meaning lots of bidding wars and lots of potential issues so you want a representative who understand’s you and your needs to keep things calm & cool.
Your relationship with your Realtor is one of the highest forms of Agency Relationship that you can have as a “client”. Your Realtor will be working with you on a very personal level and will be working with one of the biggest assets of your life & with a large chunk of your money; So I ask, why are most people only concerned with getting a “deal” or using the person who sold the most homes last month?
As this is a serious relationship, I think more value should be placed on how your “relationship” will work and how your Realtor can help you, rather than solely on past performance and how much money you can save up front. Those agents who have large sales numbers don’t necessarily provide great service and the reality is that agents can use a number of different parameters to find statistics to showcase themselves in the best light but may not present the whole picture. The reality is your contract will be with Brokerage, not the agent, so their sales stats should play a secondary role in terms of choosing the best Realtor for you.
I have month’s where my clients make multiple offers on a few different properties but they aren’t successful. Does that mean I am a bad agent or that I am ensuring my clients don’t get stuck in a horrible contract? It depends on how you look at it, but chances are discount agents aren’t as concerned with finding you the “right” home, just finding you a home so they can get paid and move on.
Your Realtor should have you sign a pamphlet called “Working with a Realtor”, early on in the process. This document explains the obligations mentioned above and your options as a “client” or “customer” but doesn’t explain specifically how an agent is responsible (see “etc.” included in #3, 5 & 6 Regulations). This is because there are minimum standards that all agents must adhere to but additional services provided by either you or your Realtor can be added to your agreement to ensure clarity of what has been promised.
This could include specific detailed lists of wants & needs, what if any rebates or reductions have been agreed to, what services the agent has agreed to provide and who will be paying for the other services you expect to need and more.
The truth is your Listing Agreement & Buyer Representation Agreement should be treated like an Agreement of Purchase & Sale and should be discussed in detail prior to your signing. This is not to say you should be nervous about these documents; you shouldn’t. They are intended to protect you and also protect your agent.
Agents do not get paid any commission until a deal closes, this means they could work hours and hours and get paid nothing. A signed Listing Agreement or Buyer Representation Agreement ensures that an agent’s time and effort will earn them a commission should they find you a suitable home and ensures that all of the obligations owed to a client/customer are afforded to you right away.
As a quick note, you should also know that while some agreements require a minimum amount of time to be valid, you can request a “cancellation” with the Brokerage at any time. Of course, if there may be clauses included in your particular agreement that do not allow you to break it early or pay penalties. If so, you may be stuck until the original termination date. Always double check and ask about office/brokerage policies before signing as they differ from Brokerage to Brokerage and are not standardized in Ontario.
As one OREA Blog post on “Duties to Clients & Customers”1 shows, no matter who a Realtor is dealing with they need to provide a duty of care, based on honesty and when responding to questions provide accurate answers to anyone asking them. This applies to both clients & customers alike but it is clients however who are owed the greatest of all obligations including fiduciary ones.
This is only the tip of the iceberg when it comes to representation, so remember to write down your questions and do some research online prior to meeting with agents. If they can’t clearly articulate how they will help you or push to get you to sign with minimal discussion; take a step back and remember not all Realtors are made equal.
You will thank yourself down the road when you are working with an Realtor who understands you and your needs and who will be there when you need them the most.
If you still have questions, contact The Real JMcG today! Call me at 416.922.5533 or email me at firstname.lastname@example.org now.