Question of the week:

Agent representing seller and buyer

Do i stand a better chance at winning a house purchase if i go in requesting i use the sellers agent as my buying agent? To me, it seems more attractive that an agent representing a seller would want to lean towards making my offer seem better if its close to another persons offer on the house. I know this is a conflict of interest but how do you prove it. At the end if the day, the agent wont have to split the commision if he goes with me vs another buyer being represented

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Nick's Response

Hey u/BuckWildBully, that’s a good question and one that comes up a lot and it’s worth clearing this up as not everything that has been commented has been correct.

In short:

  • It will depend upon what province you are in as to whether a Listing Realtor can represent you as a Buyer client or not. It is allowed for certain in Ontario (where I work), as long as Buyer and Seller agree to it in writing. It’s my understanding that it’s not allowed in BC and I think it is allowed in most of the other provinces and territories, but maybe a Realtor from other places can chime in to say for sure.

  • As to whether it’s worthwhile for you as a Buyer to have the Listing Realtor represent you as a Buyer, that will depend upon a number of factors. Many people will “step over a dollar to save a dime,” so to speak, believing that they’re getting a good deal when they might not be. Make sure that you really have a good idea of home values if you go this route.

The expanded explanation:

  • In Ontario, you can be represented as a Buyer or Seller as a client or an unrepresented party. These are newly clarified designations that came in with TRESA in December 2023. Further to that, if you are a client, you can either be represented by the whole brokerage, called brokerage representation, or by one or more Realtors within a brokerage or team, called designated representation. When you work with a Realtor, I’ve found that for the majority of clients it makes sense to choose designated representation as it’s more specific and avoids multiple representation.

  • Multiple Representation (or “double-ending”) occurs when the same party, such as one Realtor acting under designated representation, or one brokerage in brokerage representation represents both the Buyer and Seller in a transaction.

  • Total commission offered by a Seller to their listing brokerage is set out in the Listing Agreement. There is often a provision for part of the total commission to be paid to a Buyer Realtor’s brokerage. If there is no Buyer Realtor involved for the Buyer, the Listing Realtor will either get the total commission or there may be a provision for the total commission to be discounted. The only parties to this document are the Seller and their Realtor, and it can only be changed if both of them agree.

  • Many Buyers believe that they will “get” the Buyer Realtor’s portion of the total commission paid by the Seller if they work with the Listing Realtor directly. In Ontario at least (and I suspect most if not all other provinces), it is not permitted to pay a non-Realtor commission from the sale of a listed home, though there are some brokerages that have specifically structured things to legally give a “rebate” to a buyer on closing.

  • It’s not illegal to ask a Listing Realtor to reduce their commission if they “double end” a sale with you, though they are not under any obligation to do so if it’s not already written in their Listing Agreement.

  • Some Realtors refuse to double-end sales, believing (and I would agree in most cases) that it’s very difficult to fairly and impartially represent both parties to a sale while trying to give fiduciary service to both. Realtors are within their rights to refuse to work with a Buyer if they feel it prohibits them from properly representing their Seller client.

  • Supposing that a Listing Realtor agrees to reduce their commission to “double-end” a sale. For the Buyer, this might represent a commission discount of 0-2.5% in most markets. As a Buyer, you’ll need to be sure that you’re getting enough of a deal before the commission discount to be sure that you’re actually getting a good price on the home. This requires a very clear idea of true market values of the property that you’re interested in.

  • In Ontario, if there are multiple offers on a property and one Buyer’s Realtor is accepting a discounted commission, all other parties offering on a property are informed of this and have the opportunity to adjust their offers/commissions as well.

  • In Ontario, a Listing Realtor has to represent their Seller client first and foremost (fiduciary duty) until the moment that you also become a client of theirs. In fact, they are very limited in what they can do for you until then. It’s definitely worth having a look at the new mandatory RECO Information Guide

     

     that Buyers and Sellers need to sign when buying or selling a home here.

False statements – These come up in the comments all the time in this type of question and are worth pointing out:

  • “It’s illegal for a Realtor to double-end a sale.” – It depends upon the province, as Real Estate is governed provincially.

  • “It’s free to work with a Buyer’s Realtor.” – Not exactly. Since the Buyer is paying for the home, and the commission forms part of what is paid for the home, the Buyer is effectively paying for all of the commission. You could also argue that the Seller pays for all of the commission out of the proceeds of the sale of the home. Either way, commission is being paid if there’s a listing agreement. What’s probably meant by this common statement is that if commission is provided to the Buyer’s Realtor by the Seller in the Listing Agreement, there’s no additional cost to the Buyer to have their own Realtor.

  • “Listing Realtors will get my offer accepted because they get more commission,” – Some will, but all Realtors are required to present any legal offers (a verbal offer doesn’t really count here) to the Seller. It’s the Seller who decides whether to accept the offer or not, and the listing Realtor can’t decide not to present an offer or “slow walk” another offer just because they potentially make more commission. There are serious consequences for that in all provinces and if you know (or even suspect) that a Realtor has done this, please report them to the appropriate governing body and call it out in their online reviews. There should be no place for that behaviour.

Good luck, whatever route you take!

Source: I’m a Realtor in Ottawa, Ontario

3 Places where you can save money on your offer as a Buyer

1

Know the Market – Your best weapon is knowing where the market is, where it’s going and to have a strong grasp on relevant comparable homes to your target property. If you’re in Ottawa, ask to be put on our weekly e-newsletter to keep the pulse of the city.

2

Unconditional Offers – Don’t do this recklessly, but Sellers will pay for the certainty of an unconditional offer. I’ve found in Ottawa that usually translates to 1-2% of the asking price of the home. Protect yourself by doing your due diligence before you place the offer instead of including it as a condition.

3

Don’t Get Emotionally Attached – Never fall in love with a home until you’ve got the keys in hand. If you can negotiate unemotionally (your Realtor can help with this) you’ll be much more effective.

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