As a real estate salesperson, I meet people everyday who don’t quite understand what it means to work with a Realtor®. The real estate industry has advanced in many ways over the past few years.  As a consumer, it is important to understand the many benefits of hiring a Realtor® to work with you throughout the entire home buying and selling process.  The following are terms and definitions as described by the Ontario Real Estate Association (OREA).  I trust that this will answer any questions you may have about the real estate industry.  Feel free to forward me any other questions you may have.

Honesty and Integrity
Most real estate professionals in our province are members of the Ontario Real Estate Association (OREA) and only members of OREA can call themselves REALTORS®.  When you work with a REALTOR®, you can expect strict adherence to provincial laws, which includes a Code of Ethics.  That code assures you will receive the highest level of service, honesty and integrity.

The Agency Relationship
When working with a REALTOR®, it is important to understand who the REALTOR® works for.  To whom is the REALTOR® legally obligated?

REALTORS® are governed by the legal concept of “agency.” An agent is legally obligated to look after the best interests of the person he or she represents.  The agent must be loyal to that person.  A real estate brokerage may be your agent – if you have clearly established an agency relationship with that REALTOR® with a representation agreement.  But often, you may assume such an obligation exists when it does not.  REALTORS® believe it is important that the people they work with understand when an agency relationship exists and when it does not – and understand what it means.

In real estate, there are different possible forms of agency relationship:

1. Seller Representation
When a real estate brokerage represents a seller, it must do what is best for the seller of a property.  A written contract, called a listing agreement, creates an agency relationship between the seller and the brokerage and establishes seller representation.  It also explains services the brokerage will provide, establishes a fee arrangement for the REALTOR®’s services and specifies what obligations a seller may have.  A seller’s agent must tell the seller anything known about a buyer.  For instance, if a seller’s agent knows a buyer is willing to offer more for a property, that information must be shared with the seller.  Confidences a seller shares with a seller’s agent must be kept confidential from potential buyers and others.  Although confidential information about the seller cannot be discussed, a buyer working with a seller’s agent can expect fair and honest service from the seller’s agent and disclosure of pertinent information about the property.

2. Buyer Representation
A real estate brokerage representing a buyer must do what is best for the buyer.  A written contract, called a buyer representation agreement, creates an agency relationship between the buyer and the brokerage, and establishes buyer representation.  It also explains services the brokerage will provide, establishes a fee arrangement for the REALTOR®’s services and specifies what obligations a buyer may have.  Typically, buyers will be obliged to work exclusively with that brokerage for a period of time.  Confidences a buyer shares with the buyer’s agent must be kep confidential.  Although confidential information about the buyer cannot be disclosed, a seller working with a buyer’s agent can expect to be treated fairly and honestly.

3. Multiple Representation
Occasionally a real estate brokerage will represent both the buyer and the seller.  They buyer and seller must consent to this arrangement in writing.  Under this multiple representation arrangement, the brokerage must do what is best for both the buyer and the seller.  Since the brokerage’s loyalty is divided between the buyer and the seller who have conflicting interests, it is absolutely essential that a multiple representation relationship be properly documented.  Representation agreements specifically describe the rights and duties of everyone involved and any limitations to those rights and duties.

4. Customer Service
A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation.  This is called “customer service.”  Under this arrangement, the brokerage can provide many valuable services in a fair and honest manner.  This relationship can be set out in a buyer or seller customer service agreement.  Real estate negotiations are often complex and a brokerage may be providing representation and/or customer service to more than one seller or buyer.  The brokerage will disclose these relationships to each buyer and seller.

Who’s Working for YOU?
It is important that you understand who the REALTOR® is working for.  For example, both the seller and the buyer may have their own agent which means they each have a REALTOR® who is represeting them.  Or, some buyers choose to contact the seller’s agent directly.  Under this arrangement the REALTOR® is representing the seller, but may provide many valuable customer services to the buyer.  A REALTOR® with a buyer may even be a “sub-agent” of the seller.  Under sub-agency, both the listing brokerage and the co-operating brokerage must do what is best for the seller even though the sub-agent may provide many valuable customer services to the buyer.  If the brokerage represents both the seller and the buyer, this is multiple representation.

Code of Ethics
REALTORS® believe it is important that the people they work with understand their agency relationship.  That’s why requirements and obligations for representation and customer service are included in a Code of Ethics which is administered by the Real Estate Council of Ontario.  The Code requires REALTORS® to disclose in writing the nature of the services they are providing, and encourages REALTORS® to obtain written acknowledgement of the disclosure.  The Code also requires REALTORS® to submit written representation and customer service agreements to buyers and sellers.

REALTOR® is a registered trademark of REALTORS® Canada Inc., a company owned equally by the Canadian Real Estate Association and the National Association of REALTORS® and refers to registered real estate practitioners who are members of The Canadian Real Estate Association.

Article printed September 2008, OREA

Are you one of the many people who don’t know what MLS® means?  It’s ok.  This is a very common term in the real estate world and you may have been too shy to ask or you don’t fully understand the extent of this term.

Who can use the term MLS®?

The MLS® initials represent the Multiple Listing Service.  The term can be found internationally and has strict requirements as to who is permitted to use this service and advertise representation of it.  In Canada, the MLS® logo is regulated by CREA (Canadian Real Estate Association).   The term is primarily used by professionals trained and licensed as real estate sales representatives.

How is my home listed in the MLS® database?

When you designate a licensed real estate sales representative to list and advertise property on your behalf, you can give them permission to enter your property information into the MLS® database.

Why do I need MLS®?

MLS® is a great way to make your property available to a wider range of professional Realtors®.  If you try to sell your home privately, you will not be able to post your listing on MLS®, which could dramatically reduce the number of potential buyers.  Many home-buyers today enlist a real estate salesperson to locate a home for them.  If your property is not listed in the MLS® database then it could inhibit your exposure.

Can the public view MLS® properties for sale?

There are several websites that advertise the MLS® service and allow the general public to view listed properties.  Once a Realtor® inputs all the data into the MLS® system it can take up to 48 hours before the public can access the information.  This is one of the many reasons why it’s important to work with a licensed real estate sales representative.  If you are buying a home, your Realtor® will be able to access all the available MLS® properties in your area before the public has access.  If you are selling a home through a licensed Realtor®, you can choose to make your home available to other real estate salespersons as soon as it is placed in the MLS® database.

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