MULTIPLE REPRESENTATION: who's working for WHO?

By: BRIAN C. MAYER

MULTIPLE REPRESENTATION: who's working for WHO?

Tags: multiple representation, pre-emptive offers, bully offers, bidding wars, Unethical practices in real estate, RECO, toronto real estate

So, you are buying a home where the listing salesperson is from the same brokerage as your agent. Or you are a seller selling your home and your agent has his own buyer. Should you be concerned?

I decided to write this blog as I found myself in this exact same situation during my last listing; where I, the listing agent was in a position to represent both my sellers and my own buyer at the negotiating table. Luckily, Bosley Real Estate has an office policy in place that when an agent is entered in a multiple representation or multiple offers situation, we are encouraged to bring our manager or Broker of Record to represent one of the parties involved should this type of situation materialize.

Multiple representation is an issue that RECO (Real Estate Council of Ontario) has been monitoring for some time. HERE to understand the pros and cons of multiple representation. 

When the buyer and the seller are clients of the same brokerage, it’s known as “multiple representation.” That’s the case even if you and the seller are working with different salespeople within the brokerage. That’s because when you sign a representation agreement as a buyer or a seller, you are entering into a contract with the brokerage, not the specific salesperson or broker that you are working with.

While multiple representation is relatively common, it’s still a matter that requires thorough disclosure by the brokerage and your written consent. You should carefully consider the situation before providing consent.

Let’s assume a situation where both parties are clients of the brokerage. That means that the brokerage has an obligation to promote and protect the best interests of both you and the seller. There’s potential for a conflict of interest, so you can see how issues could arise.

For example, the brokerage would know about your budget, your offer strategy and other information that could be helpful to the seller during negotiations. Similarly, the brokerage would know about the seller’s sales strategy.

When a multiple representation situation arises, your brokerage must disclose to both parties that it proposes to represent more than one client. It must also explain to each party how the obligations imposed on the brokerage will differ compared to if they only represented you.

Typically the differences will relate to the sharing of information and the services that the brokerage will be able to provide to you. These disclosures should be made in writing to make sure everyone is on the same page. The disclosure must be made at the earliest practical opportunity — essentially as soon as possible after the multiple representation situation is discovered.

Most importantly, the brokerage must obtain written consent from both clients before it can proceed with multiple representation. If you or the seller decline to provide written consent, the brokerage must decide which client to keep, and release the other one to obtain representation from another brokerage.

In the end, it’s up to you to decide whether to proceed with multiple representation. Take your time, ask your agent what the alternatives are (like being represented as a customer rather than a client) should this situation arise and think about the potential implications before you make a decision.

Any questions about the post - 'MULTIPLE REPRESENTATION: Who's working for who?I want to hear from you so leave your thoughts in the comment section below. 

Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662.

 

 

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