The Relationship with your Agent
How much does my real estate agent need to know?
Real estate agents would say that the more you tell them, the better they can negotiate on your behalf. However, the degree of trust you have with an agent may depend upon their legal obligation. Agents working with clients have two possible choices:
- An agent can represent the customer through a service agreement called a Representation Agreement, this creates the highest level of obligations and duties, or
- An agent can represent the customer through a service agreement call a Customer Acknowledgement.
In Alberta agents are required to disclose to their clients all possible agency relationships as soon as possible before entering into a residential real estate transaction. Here is a summary:
- In a Customer relationship (Customer Acknowledgement) the real estate agent and broker have only work to advance the customers interests. This means they must do things to buy/sell property in a beneficial manner for their customer.
- In a Client relationship (Representation Agreement) the real estate agent and broker have General Obligations and Fiduciary Duties as well to the Client. General Duties are things like exercise care and skill, act honestly, negotiate favorable terms, maintain confidentiality, act in person, obey lawful instructions, perform mandate. Fiduciary Duties are undivided loyalty, avoid and disclose conflicts of interest, not make secret profits, handle confidential information properly, and to account for monies. The agent must give advice or services that requires discretion and judgement and also include an amount of due diligence on behalf of the client.
Each of type of service agreements are available in all brokerages in Alberta. However, a brokerage can use one of two structures in how they deliver their services this is called Agency. My brokerage, RE/MAX West Real Estate, practices what is known as Designated Agency. This means that the brokerage agents do not have knowledge of the confidential information of the other agent’s clients. There are policies and procedures set up to ensure barriers are in place so that only the appointed representing agent and the broker have knowledge of the client’s confidential information. This is not the case if the brokerage practices Common Law Agency where all agents and broker are deemed to have knowledge of the client’s confidential information. While both can be subject to Conflicts of Interest, Common Law Agency can be subject to a far greater number of scenarios that produce a conflict. Be sure to ask your Real Estate Agent what agency structure is practiced at their brokerage and discuss the pros and cons of that structure before signing any representation agreement. This discussion is required to take place as indicated in the rules of Alberta Real Estate Association.
Be aware that the seller pays the commission of both brokers, not just the one who lists and shows the property, but also the buyer’s broker, who brings the ready, willing and able buyer to the table.
A Buyer should also hire his or her own agent who will represent the buyer’s interests exclusively. A Buyer’s agent usually is paid by the Seller, however, the Buyer and the Agent must enter into a service agreement which may indicate a specific amount the Agent will be paid and any amounts paid by the Seller will be used to offset the agreed to amount. The difference in the amounts must be paid in to or out of the buyer’s own pocket. By entering into the service agreement the commitments contracted by each party is document and understood by each party.
So back to the question: How much does my Real Estate Agent need to know?
That depends on the type of Relationship you have both agreed to.
In a Representation Relationship, the highest form, your Realtor should know everything that can be of value or dis-value in a negotiation. Only in this situation can an agent provide upmost advice and judgement to you in your purchase or sale and from there achieve the best terms for your situation.
In a Customer Relationship you are not depending on the Agent to provide advice or judgement. So the information you need to provide your agent should be sufficient to facilitate the transaction and provide the appropriate paper work.
Would you like to learn more? Feel free to contact me by filling in the form on the right.