You are selling your house. Your real estate agent already has an interested buyer, but there’s a catch.
The salesperson represents the buyer as well as the seller. Is that allowed?
About one in five people believe — incorrectly — that real estate professionals can act only for one party in a deal.
Fewer than half know the facts: Ontario real estate agents can represent both sides in a deal if the parties agree to it in writing.
This Q&A is part of a public education campaign by the Real Estate Council of Ontario (RECO), a regulatory body for the real estate industry, to coincide with financial literacy month in November.
Your brokerage must disclose that it proposes to represent more than one client in the transaction and tell you about the differences in its obligations resulting from this arrangement.
What if one party refuses to give written consent?
It’s up to the brokerage to decide which client to keep. If you are the one who is released, you can ask the brokerage to give you a referral to another firm.
What if the broker offers to cut the commission as part of the deal? Is the saving worth trading off some of your client protection?
A conflict of interest can arise when a buyer and seller are clients of the same brokerage, writes RECO registrar Joseph Richer in a Toronto Star article.
For example, the broker may have information about your home and your selling strategy that could help the buyer put together an offer. Similarly, the broker may know something about the buyer’s circumstances that could be useful to you in your negotiations.
“No matter what happens,” he says, “the brokerage must always deal with you fairly, honestly and with integrity and provide you with conscientious and competent service.”
Here’s another question. Is the answer yes or no?
You find a home you love and you make a conditional offer, subject to financing. Your conditional offer is accepted, but the mortgage falls through.
You have already put in a sizeable deposit to make your offer more attractive. Will you get your deposit back?
More than half the survey respondents believe — incorrectly — that your deposit is refunded automatically if you place a conditional offer on a home and the deal doesn’t proceed.
In fact, your deposit is held in a brokerage’s trust account and can be released only if both the buyer and the seller agree. If the seller demands to keep the deposit, your only recourse is to obtain a court order.
Check out a new website, called RECO Fact or Fiction, where you can do a quiz as a buyer or a seller of a residential property. I found the questions written in a way that the answers were obvious, except for the two I cite in this column.
The quiz has links to RECO’s main website for information. For example, you can learn about an insurance program that protects your deposit from a brokerage’s fraud, solvency or misappropriation of funds. You are covered to a maximum of $100,000 per claim.
Here are other survey findings:
• More than half of respondents think there are standardized representation agreements for buyers and sellers. This is not the case. Many terms and conditions, such as how long they will remain in effect, are to be discussed between brokerage and client.
• Almost half say there were sections of the real estate contract they did not fully understand when they bought or sold a home.
• More than one-third of Ontario homeowners believe — incorrectly — that a buyer or seller has a trial period in which to cancel a real estate contract after it is signed. Another third say they don’t know.
It’s good to see RECO try to educate the public on how the real estate law works for them and against them when making one of the biggest transactions in their lives.
The lesson: don’t rely on a real estate agent to protect your interests. Do your own research and be prepared