REALTORS® Representing Both Buyer and Seller - Can it Be Done Successfully??

By
Real Estate Broker/Owner with MyLethbridgeRealty.com

Dual Agency in Alberta

 

Transaction Brokerage (formerly known as Dual Agency in Alberta) is a common practice in common law real estate. Two examples where transaction brokerage might occur would be:

 

- You are working with a REALTOR® as your Buyer's Agent (ideally, under an Exclusive Buyer Brokerage Agreement). They introduce you to a property that they have listed for sale and you decide you would like to write an offer on it (and in Alberta, this would also apply to the properties listed by any other agent in your REALTORS® brokerage)

- As a Seller, you list your property with a REALTOR® (using an Exclusive Seller Brokerage Agreement) and then they introduce a Buyer to the property who would like to write an offer on it.

Before we proceed, there are a couple of things that you as either a Buyer or Seller should be aware of:

Transaction Brokerage Agreement- Before entering into Transaction Brokerage, both parties must fully understand the role of the REALTOR® and must sign a written Common Law Transaction Brokerage Agreement form before continuing in the transaction.

- The role of a REALTOR® working under Transaction Brokerage changes. No longer can they "go to bat" for just one party. They must represent both parties in a fair, impartial and even-handed manner. They in a sense become a "facilitator" to the transaction.

So what are some of the challenges involved with Transaction Brokerage?

The REALTOR® representing both parties must show extra dilligence in making sure that they are impartial. Any information that is shared must be shared to BOTH parties (other than the information that a is not allowed to be disclosed with regards to price and motivation).

If one party does not agree (either Buyer or Seller) to Transaction Brokerage, the REALTOR'S® loyalty must remain with the party with whom they first signed an agreement with. Many Buyer's choose to work without a signed agreement (Exclusive Buyer Brokerage Agreement) so even if they had been the first to work with the REALTOR®, without that signed agreement, the REALTOR'S® loyalty would have to transfer to the seller (assuming that they had signed an Exclusive Seller Brokerage Agreement, also know as a Listing Contract).

The facilitating REALTOR® loses their ability to give advice or voice an opinion UNLESS either the Buyer or the Seller specifically asks for information (and the information they give can not give an advantage to either party). A good REALTOR® will guide both the Buyer and the Seller through the questions they should be asking and will present any information needed in order to make good decisions.

So what are some questions that you need to be asking throughout the process?

Buyers:

Can you show me what properties similar to this one have sold for in the recent past? What would be an acceptable offer amount in this situation?

Do you reccomment that we have a property inspection done?

In this situation, what is a good amount of time to leave for conditions to be removed? What is a good amount of time to leave before possession?

What is the normally accepted amount in this area for the deposit that accompanies the offer?

Sellers:

Is the deposit accompanying the offer a dollar amount that is typical for this area?

What would be an acceptable counter offer in this circumstance?

Is this term / condition of the offer a reasonable request in this situation?

 

Each situation will be different, but a good rule of thumb is: If in doubt, ask questions, lots of them. Make sure you are satisfied with the answers, and if you aren't, seek guidance from other professionals outside of the transaction (lawyers, property inspectors, appraisers, etc...)

Transaction brokerage does have it's advantages as well. With one person representing both parties, there should be excellent knowledge of the property and the flow of information should be very smooth between both parties.

I work with a partner and we have our own way of dealing with transactions where we represent both parties. My partner and I co-list every property that we put up for sale with one of us chosen as the primary agent for that listing. If we get a call on the property, the secondary agent on the listing is the one who will show the home (unless it is not at all possible). If the buyers then wish to write an offer, they will continue to work with the agent that introduce them to the property and the other agent will continue to work with the sellers. We are still in a "dual agency" situation, but it allows for a bit of separation between the two parties and has worked very well for us in the past.

Transaction Brokerage can be done successfully by a professional REALTOR® who is careful to explain the process to both parties and who makes sure that each party understands the process at each step of the way.

 

Visit my website for more information on Lethbridge Real Estate.

 

 

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Rainmaker
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Larry Estabrooks
a Fully Independent Real Estate Agent - - Moncton, NB
REALTOR®, Moncton, NB

Can it be done successfully you ask? That depends on who is determining the measure of success.

If the who is the agency/brokerage which is retaining both sides of the commission, then it's a definitely a success for them. (Facilitator is just another word for double dipper.)

However if the who is a client expecting all the fiduciary duties including undivided loyalty from their real estate representative, then the answer clearly must be - NO.

The public has a right to the undivided loyalty of their own representative in a real estate transaction. They should be advised of that right and be warned against giving it up.  

Jan 03, 2009 11:09 PM #1
Rainer
23,467
Liz Toles
MyLethbridgeRealty.com - Lethbridge, AB
Liz Toles REALTOR - Lethbridge Real Estate

Hi Larry:

I always appreciate your honest opinion, but I would have to disagree with you on this one. I always advise my clients of what duties I will not be able to honour in Transaction Brokerage (namely undivided loyalty and full disclosure). I feel that a client sometimes gets better protection in Transaction Brokerage in that I am required to disclose all information to each party about the property (ones that may not be deemed necessary to disclose to an agent from a different brokerage). I always let them know that they have the option of choosing another agency to represent them if they are not comfortable with Transaction Brokerage. 

I think the key to making it work is to be completely transparent to both parties. I have usually established good relationships with both buyer and seller by the time we get to offer stage, so there is a great deal of trust in place already. I make sure to guide them to the questions that need to be answered without influencing their decisions. It isn't hard for me to be impartial and I think only a REALTOR with a very strong sense of ethics can provide the objective service essential for Transaction Brokerage to be successful.

When it comes down to it, if a seller wants to sell a property I have listed and I also have a buyer that wants to buy that property, my job is to help them find that middle ground where both are pleased with the outcome. Thanks for commenting!

Jan 04, 2009 12:04 AM #3
Rainmaker
223,559
Laurie Mindnich
Centennial, CO

Liz, in NY we have "dual agency" (as opposed to transaction brokerage). A question I have is this: when you list a sellers house, is "fiduciary" in the description of your service to them, or do you begin the process with a complete understanding on their part of "transaction" brokerage?

Frankly, I wish that this option were available here, so that there were no mid-stream change (after having collected confidential seller info) in representation to the seller- that's my big issue with dual agency (along with the fact that the buyer is often not well enough informed).

Jan 04, 2009 09:06 AM #4
Rainer
23,467
Liz Toles
MyLethbridgeRealty.com - Lethbridge, AB
Liz Toles REALTOR - Lethbridge Real Estate

 

Hi Laurie:

Section 21 of our Listing Contract is dedicated to explaining Transaction Brokerage and how my role as an agent could change. It is always discussed at listing time and we also have an Agency Relationships form that must be explained and signed. It again talks about the differences between Sole Agency and Transaction Brokerage. It helps me to know up front if they are open to Transaction Brokerage. If they are not interested in working under such an arrangement, I would have to look at other options, but funny thing is, it's never happened to me!

I agree that buyers are often the ones who don't get a good enough explanation. I guess that is one more good reason for buyers to work under an Exclusive Buyer Brokerage Agreement. Transaction Brokerage is fully explained in those forms as well. Thanks for your comments!

Jan 04, 2009 11:10 AM #6
Rainer
4,347
Wendy Bird, GRI, ABR
Westhills Realty - Sheridan, OR

I guess it all comes down to document, document, document!  I (and my company) have a policy not to engage in dual agency because of the potential pitfalls.  Most agents in my area love to "double dip" but I think the day is coming that we will no longer be allowed to do so.  My opinion is that it can't happen too soon. 

Jan 04, 2009 05:11 PM #7
Rainer
455
Jill Skriver
Realty Advocate - Lethbridge, AB

I think that the client too often suffers. You are all talking about what it should look like, but too often the Realtor and/or one of the parties are hte ones who come out on top. RECA (The Real Estate Council of Alberta) has a very large percentage of their complaints related to this issue. It allows unscrupulous Realtors to manipulate the situation, and it gets worse in the larger centres where you have larger immigrant populations, drug laundering, mortgage fraud etc. In these situations the vendor and Realtor do ongoing deals, and it works best if one Realtor controls the situation. In Lethbridge you know there are some Realtors who aren't above board. I think that it is very hard for anyone to be fair, even with the best intentions. You spend months working with a client, or maybe they are a repeat client. Someone walks in off the street, and there is impartial treatment? Did you show that buyer more homes to establish if this is the best home, prequalify them, discuss hte pros and cons of the area, establish their needs..... Most of us try but it is a road full of pitfalls!

Jan 21, 2009 12:20 AM #8
Anonymous
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Rainer
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Liz Toles

Liz Toles REALTOR - Lethbridge Real Estate
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