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What is in a ‘Buyer’s Agency Agreement’ for me?

Friday, March 9, 2018   /   by Ruth Ballantyne

What is in a ‘Buyer’s Agency Agreement’ for me?

What is in a ‘Buyer’s Agency Agreement’ for me?


For many years Ruth Ballantyne, a real estate sales representative, has heard buyers say they don’t want to sign anything. They are sure that they are protecting themselves from real estate sales representatives by simply avoiding a ‘Buyers Agency Contract’. Why in the world would you even dream of signing a contract as a buyer? What is in it for you? A lot.

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 real estate brokerage may be retained as your agent, if so, you must clearly establish this relationship with a REALTOR®.

The buyer’s agent must promote and protect the interest of the buyer at all times. He/she can advise the buyer, even if it means that he points out defaults in the property that may cause the buyer not to buy the home.

Without the clear obligations outlined you may assume that your sales representative is working for you even when such an obligation does not exist for your REALTOR®.

When a seller lists his/her house he/she contracts (under a Listing Agreement) with a seller’s agent (listing agent) and they form an agency relationship.

This establishes seller agency. A seller’s agency agreement explains the services that will be provided by the REALTOR® and the compensation that they will receive for the services.

It also establishes a fiduciary relationship. This is a legal or ethical relationship between the REALTOR® (fiduciary) and the principal (seller).

Once this relationship is established the REALTOR® is entrusted to act at all times for the sole benefit of the seller.

The broker or sales representative must relay any and all information that he/she knows about the buyer including any information that may affect the price that the buyer will pay and any motivation that the seller’s agent has that will have a bearing on the outcome of the sale.

The seller’s agent has to be loyal to the seller and keep the seller’s interests above his/her own while dealing fairly and honestly with the buyer. He/she is not legally bound to help the buyer, just to deal with him fairly and honestly.

This is where ‘Buyers Agency’ comes in and is crucial to a transaction for the buyer. Most buyers assume that the REALTOR® they are working with is working on their behalf but without the benefit of an agency contract the REALTOR® actually works as a sub-agent of the seller and therefore, has a fiduciary relationship with the seller not the buyer. He/she is then bound by law to work in the sole interest of the seller. In other words the seller is the subagent’s client and the buyer is the customer.

A client refers to a person who is represented by a broker and can be either a seller or a buyer. A client is personally represented by his/her agent. A customer is a buyer or seller who is not represented as a client.

Now let’s outline the difference in the level of service once you become a client. The buyer’s agent has a duty to educate the client — much like an evaluation that would be put together for a seller, once you have an agency relationship with your REALTOR® they can provide you with a ‘Buyer’s Study’ to ensure that you are aware of all of the current listings and sales so you can position your offer.

When acting with a buyer-customer as a sub-agent and not under agency contract, the REALTOR® is obligated to present a case that will support, protect and enhance the value of the property the buyer is purchasing.

A buyer’s agent can represent a buyer on any property listed on the MLS®, in transactions dealing with ‘For Sale By Owners’ and with builders.

He/she has a responsibility to ensure the buyer has access to the entire market. A client should also know that under buyer agency it is the responsibility of the agent to give priority access to any new opportunities to his/ her clients. A customer on the other hand may only have access to these new opportunities only after the buyerclient, and may not be offered the opportunity at all, if it conflicts with the fiduciary duties to his client.

The buyer’s agent must promote and protect the interest of the buyer at all times. He/she can advise the buyer, even if it means that he/she points out defaults in the property that may cause the buyer not to buy the home. He/she is obligated to provide and use negotiating techniques and strategies that are in the best interest of his client the buyer to forward his/her position.

The buyer’s agent must disclose all he/she knows about the property. He/she must disclose details of any previous offers that he/she is privy to, any personal knowledge of the financial and motivational details of the seller, and any knowledge he has that may strengthen the buyer’s position. Any research done or received regarding history and liens must be disclosed.

He/she also is bound to negotiate the best price and terms in favour of the buyer. He/she must structure any offer to meet the need of the buyer and keep all knowledge of the buyer’s financial position and motivation confidential.

As a customer, the sales representative is obligated to strategize for the seller, disclose any previously obtained information on the buyer to the seller, give the seller any information that may enhance the position of the selling including any known financial information, willingness to pay and motivation to the seller.

Under a buyer’s agency agreement the buyer can reveal all and any information to the agent and feel sure that it will not harm the negotiating position.

During the transaction from inception to completion, should something turn up, the REALTOR® must act for the buyer, negotiating home inspection concerns and solving any problems to the buyers satisfaction and benefit. The customer’s problems must be solved to the satisfaction of the seller.

There is one last type of agency. It is called ‘Dual Agency’. This refers to a relationship where the broker represents both the buyer and the seller.

The buyer and the seller must consent to the arrangement and do what is best for both parties. Since the buyer and the seller have different and conflicting interests, it is crucial that there be an agency agreement that outlines the specific details, duties, rights and limitations of everyone involved.

So as you can see it’s very important to understand who the REALTOR® is working for. If both parties are represented under an agency agreement, they both have someone working on their behalf to promote their interests.

Some buyers choose to contact the seller’s agent directly. Under this arrangement it is important to know that the REALTOR® is working for the seller, and must do what is best for the seller, but may provide valuable services to the buyer while being ethical, fair and honest, unless you enter into a dual agency relationship where you are both represented by the same REALTOR®.

REALTORS® believe it is important that buyers and sellers alike understand who works for whom. That’s why agency disclosure is included in the REALTOR® Code of Ethics.

The Code requires REALTORS® to disclose in writing the type of relationship they are entering into with buyers and sellers and to obtain written acknowledgement of that disclosure.

The Code also requires REALTORS® to enter into a written agency agreement with any sellers or buyers they are representing.

So, the next time you are asked to sign a buyer’s agreement with a REALTOR® keep in mind this contract is of benefit to both you and the REALTOR®.

When signed, the REALTOR® represents you and is legally bound to do what is best for you before a customer.

This means that the REALTOR® must work harder for you, make every effort to find you the best home available to suit your needs, budget and lifestyle and negotiate to get it at the best price for you. It’s in the buyer’s best interest, so why wouldn’t you sign?

REALTOR® is a registered trademark of REALTOR® Canada Inc., a company owned equally by the Canadian Real Estate Association and the National Association of REALTORS® and refers to licensed real estate practitioners who are members of the Canadian Real Estate Association. Ruth Ballantyne is president of the Brampton Real Estate Board.

Ballantyne Professionals | RE/MAX Realty Services Inc.
Ruth Ballantyne
295 Queen Street E
Brampton, ON L6W 3R1

Information is provided exclusively for consumers’ personal use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®.
Information is provided exclusively for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®. Copyright 2022 Last Updated January 18, 2022
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