Advice to Real Estate Buyers: Do Not Call the Listing Agent!

Monday Aug 09th, 2021

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Frequently I see buyers contact the Listing Agent directly to enquire about a property they are interested in. I highly recommend to buyers that you DO NOT take this route and here’s why.

If you work with the Listing Agent, they do not have a fiduciary responsibility to you.  Yes, they are obligated to be honest and ethical, but they cannot give you advice -- they can only state facts.  The relationship is strictly transactional in nature.  Typically, when you work with your Realtor, you have what is referred to as a Client Relationship which is the “highest form of obligation”.  However, if you work with the listing agent directly, you are no longer a Client, but rather a Customer.  As a Customer, the Agent no longer represents your interests exclusively in the transaction. The Brokerage “must be impartial and equally protect the interests of the Buyer and the Seller in the transaction”.  They cannot provide any information or give advice with regards to price.

Understand the Consequences of Multiple Representation

Are you wondering how this could be?  It’s simple, if you work with the Listing Agent, it’s not possible for the Agent to represent both the Seller’s and Buyer’s best interests.  After all, the Seller and Buyer have different goals and objectives.  

Buyer’s often call the Listing Agent because they think they’ll “get the inside track”.  Or, if the Listing Agent gets both commissions, they will favour your deal versus another.  This should never be the case and would result in serious penalties if proven.

You’ll know a Listing Agent is great when the first question they ask is “are you working with anyone”.  And the next should be the advice they give you to “find your own Agent independently”.  Arm’s length transactions are always preferred versus transactions where someone may be compromised or motivated in the wrong ways.

In real estate, when an Agent represents the Seller and Buyer, it’s referred to as Multiple Representation - or Dual Agency.  Agents and Brokers often refer to it as “double-ending”.  Dual agency is prohibited in countries like the UK, provinces like British Columbia and in many US States. The Government of Ontario is considering limiting the practice of dual agency.

I recently encountered a multiple offer situation where the listing Broker also represented two Buyers.  There were a total of seven offers and although my client offered the best price, a lower offer was accepted which immediately made me highly suspect.  As it turned out, everything was legitimate, and the Agent acted perfectly following all the rules.  Furthermore, as it also turned out, it wasn’t one of their Buyers that got the property which certainly calmed me down!

Still, why go down this road if you don’t need to? Call an Agent you trust to make the inquiries and act on your behalf if you’d like to make an offer.  If you don’t want to commit to a specific Realtor, then just sign a Buyer Representation Agreement for the specific property you are interested in.  This way you’ll have a Realtor who has a fiduciary responsibility to promote and protect your best interests without committing to a longer-term relationship.

About the Author
Craig Rennick is a Sales Representative of Sotheby’s International Realty Canada, Brokerage, and a member of The Toyne Team.   He lives in Collingwood and recently renovated their family cottage on Good Cheer Island in the Sans Souci area of Georgian Bay.