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We’re sometimes approached by potential buyers who want to work with the Listing Agent; instead of having their own agent (a Buyer’s Agent), they want to work with the agent who also represents the seller. They work the open house circuit, troll the MLS for properties they like, and make showing appointments directly with the listing agents. When they offer on a property, they use the same agent as the one is representing the seller – it’s called multiple representation.

Over the years, we’ve noticed that the decision to buy with the Listing Agent is often based on some basic misunderstandings about how real estate agents work.

Before getting into the risks of buying with the Listing Agent, it’s important to understand a few terms and rules in Ontario:

In Ontario, all REALTORS work for a brokerage. There are two ways a brokerage can represent a Client:

  1. Brokerage Representation – The brokerage – and all its agents – represent you. They must all promote and protect your best interests (though you will likely have one agent as your primary contact).
  2. Designated Representation – One or more brokerage agents work for you and must promote and protect your best interests while keeping your personal information confidential. The brokerage and its other agents must treat you impartially and objectively.

The most important difference between Brokerage Representation and Designated Representation is how clients are treated when the agent or brokerage represents both the buyer and seller in the same transaction.

Multiple Representation

Multiple representation is the term used when a designated agent or brokerage represents more than one client with competing interests in the same transaction.

  • Brokerage Representation – Multiple representation exists when the brokerage represents both the buyer and seller in the same transaction or two or more competing buyers interested in the same property — even when the clients work with different real estate agents.
  • Designated Representation: Multiple representation exists only when the same real estate agent is the designated representative for both the buyer and the seller in the same transaction or for two or more competing buyers interested in the same property.

It’s important to note that multiple representation is not permitted unless each client agrees.

As per the RECO Information Guide: If you agree to multiple representation, the brokerage or designated representative:

  • Must treat each of the clients involved in an objective and impartial manner;
  • Cannot maintain undivided loyalty to you or promote and protect your interests over the interests of the other client; and
  • Cannot offer advice to you about such things as the price you should offer or accept or terms that should be included in an agreement of purchase and sale.
  • Cannot share confidential information you provided to the brokerage or the designated representative when you were represented without your written consent.

The Dangers of Buying With The Listing Agent

Working with the Listing Agent won’t guarantee winning a bidding war.

True, the Listing Agent will see all the offers and could, in theory, tell you how much to bid to win it, but that is 100% against the real estate code of ethics. Any agent who tells you that you’ll have an edge when you work with them is unethical and risks losing their real estate license.

Very few agents have a ‘secret inventory’ of properties you can only access if you work with them.

Buyers who want to work with Listing Agents often mistakenly believe that doing so will give them access to a secret inventory of homes that will not be listed on the MLS. While it’s true that top agents have the inside scoop on the homes they’ll be listing in the future, most agents in Toronto only list a handful of properties per year. More importantly, it rarely makes sense for a Seller to sell to you instead of exposing their home to the open market…unless they think they can get you to pay more than market value or there’s something wrong with the house. Some Listing Agents will tempt you with the secret inventory line to get you to be their client, but it’s rare that it ever works out for the Buyer.

Related: Should I List My Home for Sale Exclusively?

It’s not usually cheaper to buy with the Listing Agent.

Some people believe that if they buy with the Listing Agent, they’ll save money because the agent will make extra commission and will pass part of that commission onto them. Truth: the Seller pays the commission; Buyers can’t actually negotiate the commission with the Listing Agent – that conversation took place long ago between the Seller and the Listing Agent and has nothing to do with the Buyer. While the Seller may save some money if the Listing Agent brings a Buyer themselves, that’s cash in the Seller’s pocket, not yours.

Related: Commission Explained

The Listing Agent won’t volunteer information about the home they don’t have to. 

Don’t count on the Listing Agent to volunteer information about the termite problem on the street, the hoarder next door, the lawsuit against the condo or the dampness problem in the basement. If you work with an experienced Buyer Agent, it’s their job to represent you and only you. They’ll get the scoop on the house and the neighbourhood. They know what questions to ask and where to research, and they hopefully already know the neighbourhood. Also: some Listing Agents in Toronto don’t do a great job of finding out about the house and the neighbourhood and the Buyer’s Agent already knows more than them. Don’t get me started on that one.

When an agent represents the Buyer and the Seller in the same transaction, they can’t advise either party on price or agreement terms and conditions. And they have to maintain confidentiality. 

It’s almost like they are a go-between between the Buyer and Seller – they can’t actually provide advice and counsel.

The Listing Agent’s goal isn’t to get you the RIGHT house, it’s to get you to buy THIS house.

Having your own agent means they are motivated to find you the perfect house in the perfect neighbourhood, no matter how long that takes. When you ask the Listing Agent to represent you, their only goal is to sell you the house they’ve listed for sale, whether or not it’s right for you.

If you’re considering working with a Listing Agent instead of getting a Buyer’s Agent to represent your interests, make sure you understand the limitations and risks. 

 

Comments

  1. Adarsh Arora says:

    Nice article. With thousands of people becoming realtor every year by just passing exams. Not all of them possess the knowledge and the experience. So, it is very important to hire an experienced buying agent else you end up just paying for them.
    Remember as a seller you want to see a home for x amount and brokerage is added on top of it. e.g. for home sold for 845K the seller gets around 800K.

  2. When did this Buyer’s Agent idea come into effect and what prompted it? I notice a lot of agents now put you over to their Buying Agent in THEIR office. Don’t they want to make the sale? If the Buyers Agent digs up dirt on the property how does that benefit the brokerage or the Lisitng Agent? I don’t quite get it – who gets the commish then – the listing agent or the Buyer’s Agent or is it split?

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