On June 15, 2018 new rules were implemented regarding how agency is communicated to the consumer and they entail several forms Realtors are required to review with consumers prior to starting to work with them. There are two types of relationships you can have with a Realtor, a client and unrepresented party relationship.
Why the new forms? Two reasons, firstly, agency law is common law. Which means that if two people are acting like an agent and a client, then agency law likely applies. This is referred to as implied agency and it may bind both parties to agency laws. Perhaps when they don’t want to be bound by these laws. Secondly, the Real Estate Council thought that home buyers and sellers should know this upfront and have a choice as to whether or not they wish to have a client relationship with the Realtor.
None of these forms are required if you are just requesting general (published) information on a listing, attending an open house or receiving a newsletter. However, we Realtors have to be very careful that we do not provide advice or opinions about a property when answering your questions. Otherwise implied agency may apply.
There are two important notes with these forms. One, we Realtors have a regulatory requirement to give them to you. Two, they are not a contract and do not commit you to any Realtor in any manner. However, the Conflict of Interest form is an agreement between a Realtor and two of their existing clients.
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The first form, Your Relationship with a Real Estate Professional, we must give to each person before we start working with them. It outlines the duties a Realtor owes to clients, and the duties consumers would not receive if you choose not to be represented by a Realtor. You have the choice here and if you choose to be represented as a client, it does not commit you to one Realtor and is not a contract. You may have this Relationship with more than one Realtor. What this form does is determine what level of service and duties the Realtor must provide to you.
As a client, the Realtor works on your behalf and they have special legal duties to you including:
There are a couple of other duties we Realtors owe you under law that are not mentioned on this form. They include:
In addition to these duties, when you are a client you can expect the Realtor to provide advice and give their opinion based on their experience, the situation and any information they have provided to you. Any decisions you make are, of course, up to you. As a Realtor, I work for you.
In summary, having a client relationship with a Realtor commits them to the duties they owe a client. Plus they can advise you and give you their opinion. Since this form does not commit you to a Realtor, and you can have a client relationship with more than one Realtor, I only see benefits for you to select the client relationship. One exception to this is covered in the next section.
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This form is only provided if you choose to have the Realtor not represent you on the first form. Essentially, the Realtor does not owe you any client duties, cannot give you advice or their opinion about a property, negotiate on your behalf and they are not required to protect your confidential information. It is important to know that if the Realtor is representing the other party in a transaction and you share personal information as an unrepresented party, such as what price you are willing to accept, or pay, not only may the Realtor share that information with his client, according to his/her duties to that client, they must share that information. It is important to watch what you say to a Realtor who is not your agent.
The form does identify what a Realtor may do for an unrepresented party, they include:
* While Realtors are allowed to fill out the contract at the unrepresented buyer's direction, personally I have a problem with this. We Realtors are trained on writing offers and have many resources available to us for composing an effective offer. Plus the section where we put the subject clauses (financing, insurance, inspection, etc.) is blank. Since I cannot advise an unrepresented buyer, what am I to do if I see they are making a mistake or forgetting something important? Personally, I could not just sit there and let that happen while collecting the buying side commissions at the same time. Therefore, I will not work with an unrepresented buyer. As the buyer is not paying the commission, I see little reason for a home buyer to have a Realtor that cannot advise them, protect their interests and represent them.
I have, and will, work with a home seller where they are unrepresented, usually it is a “for sale by owner,” and I am representing the buyer. For the seller the motivation is saving half the commission. As it is I and the buyer that put the offer together, it will be done correctly. Plus the seller has already decided to accept the risks of being unrepresented when selling their home. In this case I advise them to seek advise from a lawyer when I present the offer.
This form, and your consent, are required under the Personal Information Protection Act. The document explains the personal information that is collected, how it is collected and used, and by whom.
For the most part, only information necessary to aid in the sale or purchase of a home is published on MLS®. Listing information (on the MLS® System) is available to all Realtors and a shorten form of the listing is available to the public through realtor.ca and Realtor's websites that have a MLS® search. Obviously, what is published on MLS® is about the property. On the buying side, the date of sale and sale price are available to Realtors and on PCS.
This information gathered and held in MLS® is vital for Realtors to adequately advise clients. Through the MLS® database Realtors are able to assess what price to list a property, or to evaluate the price of a listed property for buyers.
Some of the information collected is also made available to Land Title Offices, legal advisers, service providers (appraisers), BC Real Estate Council, Real Estate Council of BC, Canadian Real Estate Association (realtor.ca) and BC Assessment. As BC Assessment's mandate is to assess properties at fair market value, they have direct assess to the MLS® database.
In addition to using the information to list and sell a home, other uses include collecting stats and historical data on the housing market, the enforcement of codes of professional conduct and ethics for Realtors and to comply with legal requirements and legal authorities.
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Titled "Paying for Real Estate Services: What Sellers Need to Know" this form breaks down the commission, in dollar amounts, for each offer and counter offer. While the listing agreement specifies the agreed upon commission structure, it is identified as a percentage of the purchase price. The Real Estate Council believes it would be clearer for the seller if this was converted to a dollar amount for each offer and counter offer. In addition, it identifies the dollar amount for each Realtor (buyer's and seller's) and in the case that one party is unrepresented and one Realtor is receiving both commissions, the form identifies this as well.
We Realtors are required to present this form prior to presenting any offer or counter offer.
This form is actually an agreement and needs to be completed if a Realtor finds themselves in a conflict of interest. This process has some important considerations for the clients and was created due to the elimination of the dual agency process. Which had allowed a Realtor to represent two clients on the same transaction.
Conflicts arise when a Realtor's buyer client wants to make an offer on one of the Realtor's listing, or if a Realtor has two buyers that want to make an offer on the same property.
Please note, the conflict arises when clients want to make an offer. A Realtor showing a buyer one of their listings, or showing two buyers the same property, is not a conflict in interest.
There are two options available to the Realtor and their clients. The first is that the Realtor refers both clients to other real estate professionals.
The second option is that the Realtor releases one client, which may be referred to another Realtor or that client becomes an unrepresented party. Both clients must agree to this arrangement. Otherwise, the Realtor must refer both clients to other Realtors. The Realtor must maintain the confidentiality of both clients and cannot share any personal information that has been collected.
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