Buying a House Without a REALTOR

— We take our content seriously. This article was written by a real person at BREL.

Every now and then, we’re approached by a Buyer who wants to “represent themselves” on their potential purchase one of our listings. There seems to be a lot of confusion about what that means, so today we’re going to answer the most commonly asked questions.

Can I buy a house without a REALTOR?

Yes. Just like a Seller can represent themselves, so can a Buyer.

How does that work?

In Ontario, REALTORS usually work with Buyers in one of 2 ways:

1. By having the Buyer sign a Customer Service Agreement, making them a Customer. When you’re a Customer, the agent does NOT work solely their your best interest and provides restricted services. The agent’s obligations are:
   • Fairness, honesty and integrity to everybody
   • Conscientious and competent service
   • Only disclose the material facts that he or she already knows or ought to know – they aren’t required to take any further investigative steps.
   • Limited privacy obligations
2. By having the Buyer sign a Buyer’s Representation Agreement, making them a Client. The obligations to a Client are:
   • Fiduciary: the agent must promote and protect their best interests at all times
   • Negotiate favourable terms for the Buyer
   • Maintain confidentiality
   • They must take reasonable steps to determine and then disclose all material facts about the property.

If a Buyer wants to represent themselves, they can choose to be a Customer or they can choose to refuse to sign the Customer Service and Buyer Representation Agreements.

Will the Listing Agent provide me with comparable sales and help to negotiate the sale?

The Listing Agent, in this case, works for the Seller, so their loyalties and duties are to the Seller. The Listing Agent should not give you any information that would be to the detriment of the Seller, including recent sold price information – their job is to get the best price and contract terms for the Seller.

If you’re a Customer, the agent will put together the offer paperwork for you but will be limited in the kind of advice they can provide.

If there’s only one REALTOR involved, do I get the commission that would have been paid to the Buyer’s Agent?

No. The Listing Agreement (which sets out the commissions to be paid and to whom) is between the Seller and the listing brokerage – the Buyer is not a party to the agreement and not entitled to any commission. In most situations in Ontario, when a Seller lists their property for sale, they agree to pay the listing brokerage a certain percentage of the sale price (for example, 5%), and then out of that total, the brokerage agrees to offer part of the commission to the cooperating real estate brokerage (in other words, the brokerage that represents the Buyer). For example, a listing agreement might state that 2.5% (out of the total 5%) commission is payable to a cooperating brokerage. If there isn’t another brokerage involved in the transaction, the Listing brokerage keeps the full commission.

Also, it’s important to note that in Ontario, commissions can only be paid to licensed real estate agents.

But if the Listing Agent is going to make more money, shouldn’t I get a discount?

Sometimes, the listing agreement signed between the Seller and the listing brokerage specifies that a commission discount will be applied if there is not a co-operating Broker – but it’s important to note that the discount is given to the SELLER – not to the Buyer. Again, the Buyer is not a party to the listing agreement. Occasionally, a Seller will choose to pass on part or all of that discount to a Buyer.

If there are multiple offers on a property, any discount provided to the unrepresented Buyer has to be disclosed to all other parties with offers.

So why would someone want to represent themselves as a Buyer?

Some Buyers incorrectly believe that they are somehow automatically entitled to half of the listing brokerage’s commission if they aren’t represented by a REALTOR. In our experience, the people who want to represent themselves are usually stretched financially and often can’t afford the home they want and are hoping that if they can get the commission, that they’ll be closer to being able to afford the property.

Why would I want an agent to represent me as a Buyer?

Well for starters, there isn’t usually a financial benefit to not having an agent represent your interests.

Buyer Agents are paid because they have expertise in assessing and valuing properties and neighbourhoods, negotiating contracts and terms and protecting buyer interests. You can read more about the Role of the Buyer’s Agent here.  

So should I buy with the Listing Agent?

As of writing, Ontario real estate agents can represent both the Buyer and Seller in the same transaction (it’s called multiple representation). There are important reasons why you should consider having an independent agent who solely represents your interests. We wrote a comprehensive blog about the Dangers of Buying from the Listing Agent.

It’s important to note that some agents and teams (including the BREL team) have policies in place whereby they will not represent both a Buyer and a Seller in a transaction…so this may not even be a possibility.