This was a topic in the comments a little while ago so here’s a quick look at the different types of relationship you can have with a REALTOR® (this only applies to members of the CREA hence the registered term). Anyone who’s ever bought or sold something with an agent in the last few years likely had this explained to them to various levels of completeness, but I recall when we bought our house the differences between going with a buyer’s agent and dealing directly with the seller’s agent weren’t clear to me (too many forms to read).
Essentially whenever you work with a realtor you can either be their client or their customer and each of those governs what responsibilities the realtor has towards you.
As the client, the realtor is called your designated agent and has a fiduciary duty towards you. That means that he/she must act in your best interest at all times, protect your confidential information, obey your lawful instructions, act with reasonable competence, and disclose everything (including any compensation they may receive) that could be material to the deal.
If you are a customer, the realtor does not have a fiduciary duty towards you. In this case they can give general market information, help with standard forms and processes, and present offers and counter offers. They specifically can’t advise on price or negotiate on your behalf, or disclose any confidential information about the sellers. Basically they’re working for the other side so buyer beware.
Once the relationship is set (generally by you initialing the Working with a Realtor form), it can’t be downgraded. So you can later go from being a customer to a client, but if you are working with a realtor as a client, the relationship endures forever. So that Realtor you sold your house with 10 years ago? He still has a fiduciary relationship towards you and will forever even if you have no more business dealings.
In the vast majority of cases if you are buying with a buyer’s agent or selling with a agent you will be their client. If you are selling with a mere posting, read your listing contract as most agents will lay out some limitations to their duties.
If you are not working with a buyer’s agent (like we did when we bought our house) and go directly through the listing realtor, then you will be their customer (this is called double ending). This is fine, as long as you understand who they’re working for, the limitations of advice that they can give you and do your own due diligence.
Of course any ethical code is only as good as its adherents, and the fundamental misaligned incentives in the real estate business means that there are always bad apples that don’t adhere to the fiduciary duties laid out here and exploit the information asymmetry to their advantage. After all, self regulation was not taken away from the industry because everything was peachy. Under the new regime, maximum fines for breaches of fiduciary duty have been increased tenfold so hopefully we’ll see less of it going forward.
And it’s Monday, so a quick update of the numbers (only half a week so they are a bit distorted due to the start of month relisting surge).
|Wk 1||Wk 2||Wk 3||Wk 4|
|Sales to New Listings||51%||
|Months of Inventory||