There are no MLS rules that say a listing has to provide what you expect to receive for acting as a buyer’s agent in a transaction, other than it must be greater than zero.
The rules say that before you begin to act as an agent for a buyer or seller, you fully explain your service plan, establish the amount of your fee (including how and when it will be paid) and that you put it in writing. Then, and only then, you provide the services you contracted to deliver. You don’t eat your meal in a restaurant and then ask what you owe. Knowing the cost is part of your decision of whether or not to proceed or look for other available options.
From CREA’s Standards of Business Practice:
- Article 2. “A REALTOR® shall fully disclose in writing to, and is advised to seek written acknowledgment from, his or her Clients and those Customers who are not represented by other Registrants regarding the role and nature of the service the REALTOR® will be providing. This disclosure shall be made at the earliest possible opportunity and in any event prior to the REALTOR® providing professional services which go beyond providing information as a result of incidental contact by a consumer.”
- Article 5.7. “REALTOR®s should make reasonable efforts to ensure that Service Agreements with Buyers are signed, and are required to do so in jurisdictions that mandate written agreements.”
I want to emphasize this part so I’m going to repeat it over and over:
- It must be done before a customer becomes a client as timing is critical in order to avoid breaching your duty of full disclosure and to avoid conflict of interest.
- It must be explained in writing.
- It should be signed by all parties.
I deeply wish I could say it must be signed by all parties, but while the rules don’t say that, they do say that it has to be “in writing” and “should” be signed.
That means your manager and/or the board should be able to come to you and see copies of the written agreements you have with all your clients – buyers and sellers both.
Sellers are easy. You’d show me the Listing Contract. What would you show me for your buyer clients? The Working With a REALTOR® brochure? I’m not sure that’s good enough. Show me where you talked about the money! If I dropped by your office, could you show me where you have your service plan and expectation for remuneration spelled out with your buyer client in writing? Could I go to one of your buyer clients and find it in their documents?
The reason I am focusing on buyer agents is because, historically, the way we have always dealt with sellers supports the regulations. When we take a listing we cover all the details that need to be covered: time period, price, commission and services to be performed because they’re in the Listing Contract and we all use Listing Contracts. We don’t even think about it.
When it comes to buyers, the historical way we have dealt with them is in conflict with the regulations. What you may not realize is that, today, you have the exact same duties and responsibilities to a buyer client as you do a seller client. Agency law changed in 1994 but too many of us still use the same old methods and forms. We have forms now that address buyer agency relationships but the majority of us don’t use them because we don’t understand them, we’re not familiar with them and we don’t have to.
I’d like to point out here that ethics are generally acknowledged to be a higher standard than following the letter of the law. Properly explaining our agency relationships and our expectations for remuneration in writing, having it signed and with all parties receiving copies will go a long way towards ensuring clarity, building your clients’ confidence in your abilities and showing your commitment to their best interests by demonstrating your professionalism. It is literally the foundation you lay that everything else you do will build upon. It should be rock solid.
Business models reflect society and thrive. Society evolves. Business models must also evolve.
The fact that there are so many different business models in our industry today underscores the importance of having our agreements in writing. It’s confusing out there and it’s our responsibility to bring clarity and consistency to how we work.
The Working With a REALTOR® brochure, a great place to start your Agency conversation, lists one of your fiduciary duties as “undivided loyalty”. That’s awkward! Do you, or anyone you know of, work with only one customer at a time?
Permission to act for multiple clients is just one of the compelling reasons to use the correct forms for our written agreements. Among other things, the Listing Contract, the Exclusive Buyer Agency Contract, the Buyer Agency Acknowledgement Form and the various Fee Agreements all contain clauses that modify the explicit duties agency law imposes. We absolutely need the clauses in those forms to modify our fiduciary duties in order to allow us to work the way we do.
Paul Cowhig is the professional standards advisor for the Fraser Valley Real Estate Board (FVREB) in Surrey, B.C. Previously, Paul spent two years as professional standards co-ordinator for the Okanagan Mainline Real Estate Board in Kelowna. He was first licensed as a salesperson in 1980 and earned his broker’s license in 2013. Paul is proud to have served on the FVREB Board of Directors from 1996 to 2002 and as its president in 2001.
