What is a Buyer’s Agency

Dear Rebecca
We are hunting for our home by searching the realtor.ca website and going to open houses. We thought going to open houses would be a good way to casually interview real estate agents and see homes at the same time. Recently we went to see a house we found online and really liked the agent who showed it to us. We saw a couple of houses with him but now he wants us to sign a buyer’s agency agreement. Friends of ours told us they did not sign one with their real estate agent. Are buyer’s agency agreements normal practise? Is this something we should sign?
Julie

Dear Julie

Buyer’s Agency Agreements are common practice and their use is well established in many places in Canada. Some real estate professionals will only show homes with a signed agreement in place. In the Fredericton area, the use of a Buyer’s Agency Agreement although not widespread is growing.
When you meet with a real estate salesperson at an open house or call the sign on a home you want to view, the real estate salesperson you are speaking with is representing their “client”, the seller. They are not representing you and your interests. Without a written agreement, your type of interaction with the listing salesperson is classed as a “customer” relationship. Real estate salespeople do not have the same obligation to customer as they have to a client. Duties to a client are at a higher level. A REALTOR® is obligated to; treat customers honestly, to disclose known material facts about the property and to present all offers promptly. Any information that you disclose as a customer though, is not confidential. In fact, the salesperson is obligated to inform the seller of any information that is advantageous to the seller.
All sellers who have their homes listed with a real estate agency have established a client- principal relationship between the seller and the real estate agency with a contract known as a Listing Agreement. The obligations to the client are not only from the real estate salesperson but also include his agency and all salespersons in his agency. The term for this level services owed to the client is fiduciary duty. A “client” is owed all the duties owed to a “customer” plus the additional duties of advocacy, obedience, loyalty, disclosure, accountability, confidentiality and reasonable care and skill.
By signing a Buyer’s Agency Agreement, you would be elevating your status from customer to client by express agreement. Similar to the Listing Agreement, the Buyer’s Agency Agreement contains terms and conditions that should include an expiration date and a commission rate. Just as in the Listing Agreement, the commission rate and expiration date are negotiable terms of the contract. It is important to note that in the Buyer’s Agency Agreement, there is usually a clause whereby the buyer’s obligation to pay commission is waived if a listed property is purchased and that property offers a commission equal to or above the agreed amount in the buyers agency agreement.
If you are not confident with your understanding of the terms of the Buyer’s Agency Agreement, you can ask your lawyer to review it. You also may want to obtain from the REALTOR® a few references from past clients. With client references and a clear understanding of the contract, you will likely feel comfortable to sign a Buyer’s Agency Agreement with a real estate professional.