Your Uncle Justin is buying his first home but hasn’t chosen you as his realtor. He explains that he values his relationship with you and wouldn’t want to risk it being damaged and potentially dividing the family if anything unforeseen went wrong.
Most realtors have been there, passed over by a relative or close friend. It’s a bitter pill, but that doesn’t mean Uncle Justin’s reasoning is invalid. In fact, he may be doing you both a favour.
“Realtors are held to high standards, and a family member may be held to an even higher standard,” says Sotheby’s International Realty Canada President and CEO Don Kottick, past president of the Real Estate Institute of Canada. “An inexperienced agent could lead to loss of wealth and even litigation.”
Even seasoned agents can find themselves involved in deals that – through no fault of their own – go south and wind up wreaking havoc with family dynamics, says Kottick.
Of course, there are plenty of solid reasons to work with loved ones, not the least of which hopefully is a strong existing relationship, say Kottick and his colleague, Maureen O’Neill, a former Toronto Real Estate Board president.
Generally, in their experience, these situations go well. But on the flip side, the stress and high emotion of a real estate transaction can be compounded when working with family. “It kind of steps it up a notch,” says O’Neill, adding that she’s heard stories about families carrying resentment for years afterwards.
Experienced full-time realtors who put the client’s interests first are the key to success, say Kottick and O’Neill. It comes down to the quality of the realtor, they contend, and to treating all clients professionally. Market knowledge and transparency are crucial.
So is full disclosure.
Realtors who represent relatives are required to disclose the relationship in writing to all involved parties before an offer is made, according to real estate regulators. Not doing so can leave the realtor open to legal challenges and complaints around conflict of interest.
Realtors must also disclose if they have an ownership stake or other financial or personal interest in the property.
As Quebec’s real estate regulator outlines, this means “a conflict of interest in any situation, real or perceived, in which a license holder has a direct or indirect interest that could compromise the manner and motivation with which she/he carries out duties.”
Clients need to focus on the sale or purchase at hand. If a relative acting as their realtor is in over their head or is compromising the working relationship because they can’t put aside unresolved family issues, “It’s their fiduciary obligation to refer to another agent,” Kottick states.
To avoid things reaching that point or worse, you’ll need to set boundaries from the get-go. If your family member wants a discount and you feel that shouldn’t be an expectation, outline the value and resources you will be providing, such as staging or a home inspection, suggests O’Neill. And recommend that they interview other agents and go through the same vetting process with you as with everyone.
Dual agency, currently a hot topic across Canada, presents another sticky dilemma. Even where it’s still allowed, it may be ill-advised, particularly when working with family.
“It’s my professional belief that disclosure isn’t enough when acting as a dual agent for both a family member and represented client,” says Trevor Bolin, who along with being a Re/Max brokerage owner in Fort St. John, British Columbia, and a past director of the BC Northern Real Estate Board, is also the Conservative party leader for B.C.
B.C. realtors are no longer allowed to double-end deals. But in provinces where they are, Bolin’s advice would be to represent your own family and bring in another agent to handle the other side. “One of the greatest compliments is clients trusting us to represent them, especially family. The onus is on us to ensure we respect that trust and know when it’s right to ask for help.”
He continues: “When working with family and close friends …this can be one of your trickiest deals, so make sure expectations are well set out in advance. My final advice is (to) make sure they want to use your services, not just feel like they have to. Sometimes being a great family member or friend means being by their side and on their side, not being their realtor.”
Susan Doran is a Toronto-based freelance writer who has been contributing to REM since its very first issue.