That’s pretty simple... or at least seems pretty simple on the surface. However, in the world of Real Estate Sales, things are often much more complicated, or perhaps less obvious than we would all prefer.
In Nova Scotia, in any real estate transaction in which a licensed Realtor is involved, you are either:
- a client (the Realtor has a duty to serve your interests) or,
- a customer (think ‘giant retailer’ associate).
In dealing with a buyer customer, a Realtor cannot:
provide information relating to the sellers motivation to sell, or any other information the seller has provided, that the seller could consider to be confidential,
offer advice with respect to price or other terms of an offer to purchase,
offer advice relating to competing properties that could be seen as equal or better in any respect,
disclose any other information that would harm or weaken the sellers position in negotiating the sale of their property.
If I were buying a property in community for which I do not hold a real estate license I would use a licensed Realtor and I would insist on a client type relationship.
I would only accept a customer relationship if I knew more about the property than both the seller and the seller’s agent combined, and, my lawyer was better at real estate than their lawyers. And even if that were the case, for negotiating purposes, I would likely have an interest in identifying a) comparable sales, b) other properties currently on the market and, in having assistance in interpreting that information.
—
The worst surprise would be to discover that you were actually a
customer and that no one had pointed out the implications, or worse, gave you some reason to believe that you enjoyed some or all the benefits of a “
client” relationship.
The danger for a Realtor is that in answering a
routine question for a buyer, they could establish the impression of an agency relationship with the buyer and in the process, breach their duty to a seller.
In Canada, most jurisdictions are emphasizing and focusing attention on specific disclosure of the relationship (Representative Capacity) and at the national level the industry has established standards with respect to
• when the disclosure is made,
• the completeness of the disclosure (to avoid misunderstanding), and
• what does, and does not, trigger the need for disclosure.
The national standard has offered the view that, “Essentially, the triggering event hinges on whether confidential information has or may be inadvertently shared.” It should be remembered that the nature of “confidential” is viewed from the perspective of the consumer who is the principal in an agency agreement, typically the seller (by virtue of a listing agreement) or the buyer (if a Buyer Agency agreement exists). In the event of a dispute the matter will be adjudicated by the courts or an industry regulatory body.
When I started in Real Estate in the 1980's it was a kinder, gentler time (or seems that way now... ;-) We were conscious of acting in the best interests of the seller but at the same time tried to practice "Do unto others, as you would have them do unto you."
For a time, (some years ago) the Real Estate Industry used “Limited Dual Agency” agreements in an attempt to resolve the problems associated with the competing interests of buyers and sellers. Limited Dual Agency was reviewed by the courts (2001) and “According to the Judge, the notion of dual agency was untenable, as there was no way that the agent could meet the obligations of representing competing interests.”
Now, the Real Estate industry in Nova Scotia has moved firmly towards a much better solution to meeting the requirements and competing interests of buyers and sellers.
The Buyer Agency Agreement is the key element in this solution!
The Buyer Agency Agreement acknowledges the client relationship, and details the duties and obligations the agent and buyer owe each other.
Remember that part about things being pretty simple?
What happens when two unrelated buyer clients who are using the same agent are also both potentially interested in the same property?
While this is more likely to occur in a strong real estate market, and with income properties or condominiums, it could occur for any buyer and might also find several purchasers working with the same agent in competition for the same property.
While the agency agreement that was signed first has some priority this is a question that you should put to your agent. The most important thing is for each buyer to know where they stand.
In the Halifax area of Nova Scotia call me at: (902) 877-7654 or contact me by email
© 2007-2010
David L. Potter
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