Realtors are governed by the legal concept of "agency". An agent is legally obligated to look after the best interests of the person he or she is working for. The agent must be loyal to that person.
A realtor may be your agent - if you have clearly established an agency relationship with that realtor. But often, you may assume such an obligation exists when it does not.
Realtors believe that it is important that the people they work with understand when an agency relationship exists and when it does not - and to understand what it means.
In real estate, there are different possible forms of agency relationship:
When a real estate company is a "seller's agent" it must do what is best for the seller of a property. A seller's agent must tell the seller anything known about a buyer. For instance, if a seller's agent knows a buyer is willing to offer more for a property, that information must be shared with the seller. Confidences a seller shares with a seller's agent must be kept confidential.
A buyer can expect fair service and disclosure of pertinent information about a property. Nothing will be misrepresented about a property. All questions will be answered honestly.
A real estate company acting as a "buyer's agent" must do what is best for the buyer. A written contract establishes buyer agency. It also explains the services the realtor will provide, spells out who will pay and specifies what obligations a buyer may have. Typically, buyers will be obliged to work exclusively with that realtor for a period of time.
A realtor working for a buyer will keep information about the buyer confidential from the seller.
Occasionally a real estate company will be the agent of both the buyer and the seller. Under this "dual agency" arrangement, the realtor must do what is best for both the seller and the buyer. A dual agent must fully disclose information to both the buyer and seller. No information will be confidential.
A realtor can be a dual agent only if both the buyer and the seller agree in writing.
Usually the realtor will be paid from the proceeds of the sale. The listing agreement states the realtor's fee.
When More than One Realtor is Involved
Often, a buyerr will work with one realtor and a seller will work with another. It may appear that the realtor working with the buyer is working for that buyer in an agency relationship. That is not necessarily the case. The realtor working with the buyer may be a "sub-agent" of the seller. In this case, the realtor is actually a seller's agent. While a seller's agent can provide many valuable services to a buyer, he or she must do what is best for the seller.
If a written contract exists with a buyer, a realtor can be a buyer's agent. Buyers and sellers will always be told - in writing - who a realtor is working for.
Honesty and Integrity
Most real estate professionals in Ontario are members of the Ontario Real Estate Association (OREA) - and only members of OREA can call themselves realtors.
When you work with a realtor, you can expect not only strict adherence to the laws of this province, but also adherence to a Code of Ethics. And that code is very important to you - because it assures you will receive the highest level of service, honesty and integrity.
Highest Professional Standards
Before receiving a real estate licence, candidates must successfully complete and extensive course of study developed by OREA on behalf of the Government of Ontario. And that is only the beginning: in the two years after receiving their licence, the new professionals are required to successfully complete three additional courses as part of their articling with an experienced broker.