Understanding what type of relationship you have with your Realtor, and the brokerage he or she works for, will help you understand how the negotiation process works when you’re selling a home.
When an agent is working on your behalf, an agency relationship is created.
Typically, in Toronto we see three types of agency…
- Listing Agency - A listing agent who works exclusively on the seller’s behalf and whose job is to help the seller negotiate to get the best possible price
- Buyer Agency - A buyer agent whose duty is to work on behalf of the buyer, and help them get the best price and offer terms
- Dual Agency - A dual agent (one single agent) who represents both the buyer and the seller and is ‘theoretically’ neutral in the transaction - he or she listed the home and brought in the buyer
By understanding where each agent’s loyalties lie, you’ll know what you can and cannot tell them.
An exclusive seller’s agent represents only the sellers, not the buyers. If your exclusive seller’s agent finds a buyer for your home, I’d suggest he have another agent — maybe even a co-worker from the same brokerage — represent the buyer in your transaction. In some cases, the buyer may have no agent at all. Your exclusive seller’s agent is loyal only to you, so it’s OK to discuss strategy with him.
Do you want the agent to represent you and only you when you buy a home so that all the information you share with him or her is confidential? Opt for an exclusive buyer’s agent.
In Toronto, agents can represent both the buyer and seller. This typically happens when the listing agent finds a buyer themselves for your home, either through an open house or some of their marketing. This is one of the ways dual agency is invoked.
As a dual agent, they seek to bring both sides of the transaction together. Legally, they can’t do something that’s only good for one and not for the other side.
The agent must disclose the dual agency relationship and both you and the buyer must agree in writing to such dual representation because of the potential for conflicts of interest.
While dual agents have an obligation not to share any confidential information about a client without their permission, as the seller, be sure to inform the listing agent you are working with that the information is confidential. You need to understand that any non-confidential information may be shared with the people on the other side of the transaction.
There’s obviously a big increase in potential commission income earned if both seller and buyer are represented by the same agent. Note that I’m not saying it may be an issue if both agents are working for the same company! In my belief that’s not the case.
However, it is our Team’s philosophy and opinion that, while it’s not illegal, we believe it can be a definite conflict of interest for the listing agent to also be personally bringing a buyer to the offer table.
There’s just too much temptation to accommodate what the buyer wants when the listing agent has already made a written commitment to work hard on the seller’s behalf to get the home owner the best price and offer terms.
A professional Realtor will help you sell faster, get a better price, and guide you through what can be a complex process. So, you’ll want to find an agent who suits your needs and who you can trust.
Knowing which type of relationship you want to have with your agent will help you negotiate the best possible agreement.
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