— We take our content seriously. This article was written by a real person at BREL.
As of December 2023, new rules are in place to guide Ontario homebuyers who want to buy a home without a REALTOR. The Ontario Real Estate Association refers to this as ‘Self Represented Parties’ or SRP. Here are answers to the most common 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?
Self-represented parties are not clients of a real estate brokerage and are (by definition) representing themselves.
If you’re a Self-Represented Buyer: The Seller’s REALTOR works for the Seller and is legally required to act solely in their client’s best interests. If you’re an SRP Buyer, a listing agent who shows you a property is obligated to share any information you reveal to them to their Seller, as they aren’t working for you. They can share your motivation, how much you can afford, etc. They also cannot:
- Provide you with any services, opinions or advice
- Do anything that would encourage you to rely on their knowledge, skill or judgement
- Encourage you to represent yourself or discourage you from working with another REALTOR
The only services that the Seller’s agent can provide to a self-represented party are those that are in the best interest of their Seller client – for example, showing you the property.
What are the risks of representing myself as a Buyer?
If you don’t have deep real estate knowledge and expertise, you may be putting yourself at great risk, as Self Represented Parties are solely responsible for looking after their own interests and protecting themselves; meanwhile, the other party is likely benefiting from the services of an expert. While you can get help from a lawyer with the paperwork, so much more goes into buying or selling a home than paperwork.
Will the Listing Agent provide me with comparable sales and help to negotiate the sale?
The Listing Agent works for the Seller, so their loyalties and duties are to the Seller. The Listing Agent is not permitted to 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 there’s only one REALTOR involved, do I get the commission that would have been paid to the Buyer’s Agent?
The Listing Agreement sets out the commissions to be paid and to whom, and is negotiated between the Seller and the Listing Agent before a home is listed for sale. 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 unless the listing agreement dictates otherwise.
But if the Listing Agent is going to make more money, shouldn’t I get a discount?
Sometimes, a listing agreement signed between a Seller and a listing brokerage specifies that a commission discount will be applied if there is no cooperating broker – but that the discount is given to the Seller, not the Buyer. Before listing their home for sale, a Seller may negotiate a lower commission rate if they sell to an SRP, but there’s no guarantee that ‘savings’ gets passed onto a self-represented Buyer.
So why would someone want to represent themselves as a Buyer?
Some Buyers incorrectly believe that they are 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, 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 instead of being an SRP?
Ontario real estate agents can represent a 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.
Gord Collins says:
The stats suggest homeowners are not using FSBO as much. On a million dollar sale, you’d certainly want to be working with a real estate agent. What does the Realtor’s insurance cover and what are all the financial vulnerabilities a buyer or seller faces if they try to represent themselves. The risk seems really high.
John Hall says:
Always a good read!Thank-you.
Jeff says:
I “self represent” and I’m not entitled to commission??? So essentially, I’ll have to write in the purchase and sale agreement that I will be paid 2.5% of the full amount of the accepted offer on closing day. The other 2.5% will go to the selling agent. Got it!
Brendan Powell says:
Well, you can negotiate to whatever sale price you and a seller agree on. However, there are restrictions on who can be paid commission (otherwise any Joe could call themselves a realtor), and of course the seller is free to sell in any way they choose as well…so if they contract to do x, you would have to negotiate with them to change that.
I think the key is that nobody is “entitled” to anything specific! It’s all part of the negotiation.