If you are thinking about a buying or selling a home, you should be using a Realtor and you should be aware of how agent relationships work. Many people don't quite understand the different types of representation available to them, especially buyers. Many buyers do not understand the risks they take by not securing the services and knowledge of a professional Realtor.
A buyer can secure the services and knowledge of a Real estate agent by signing a "Buyer Representation Agreement". The buyer is in fact, entering into an agreement with the brokerage for a specified amount of time. This legally obligates your Realtor to act in your best interests and anything that your agent may learn about you cannot be disclosed.
When a seller chooses to list their home with a Realtor, they sign a "Listing Agreement" which creates a client relationship between the seller and the listing brokerage. The listing agent is obligated to pursue the seller's best interests and disclose any pertinent information they might discover about potential buyers.
In some situations, multiple representations may occur where a brokerage represents both the seller and the buyer. Both parties to the transaction must agree in writing. These situations may represent conflicting interests and it is important for brokerage to do what is best for both the seller and buyer. Due to the nature of this type of representation, it is essential to properly document the relationship.
A real estate agent may still provide honest and ethical services to buyers and sellers without creating a buyer or seller representation. This type of relationship would be known as customer service. If you chose to enter into a customer service agreement, your best interests are NOT being pursued and your Realtor is NOT obligated to give you good advice.
Many people are well aware of client relationships when it comes to selling their house, but very few people are aware of agency relationships when it comes to buying a house. There is large percentage of buyers that believe they can get a better deal by browsing homes and contacting the listing Realtor directly. This couldn't be further from the truth. The listing Realtor is legally obligated to pursue their seller's best interest. Meaning they will try to get them more money, better terms, better clauses, etc. The listing agent must be honest and ethical with you, but anything that they learn about you will be used against you to further the seller's best interests. These buyers don't realize the significance of the "customer service" relationship they have created with the listing Realtor.
By law, your real estate agent must present you with a Working With A Realtor form at the earliest possible convenience. This form further explains agency relationships and ensures you understand the difference between being represented as a client or a customer.
As a local real estate agent in Mississauga and Square-One area, I always prefer to work with clients rather than customers because it allows me to do a better job for my sellers and buyers. If you have more questions about agency relationships as it relates to real estate, please contact Rizwan-Pasha.