Multiple Representation – What is it, and How Does it Affect You?
This blog is designed to fully educate you and keep you informed about Multiple Representation, which is a hot topic in today’s Real Estate market.
Assuming that you have entered into a client relationship with a Real Estate Brokerage, occasionally that Brokerage may also have a client relationship with both the buyer and seller of a property. This can occur whether the buyer and seller is using the same Sales Professional or two different Sales Professionals within the same Brokerage. There may also be instances when the Brokerage represents two or more buyer clients making competing offers on the same property. These situations are reffered to as “multiple representation”.
The Real Estate and Business Brokers Act 2002 (REBBA 2002), which is administered by the Real Estate Council of Ontario (RECO), has specific guidelines for Brokerages and REALTORS®. They must ensure all involved buyers and sellers, confirm in writing that they acknowledge, understand, and consent to the multiple representation situation before any offer is made. For this consent, a Confirmation of Co-operation and Representation document is used by the Brokerages inolved.
In multiple representation situations, there is certain information that shall not be disclosed. There is also certain information that must be disclosed. Below is a summary of these items:
Items that SHALL NOT be Disclosed in Multiple Representation Situations:
- That the seller may or will accept less than the listed price, unless otherwise instructed in writing by the seller.
- That the Buyer may or will pay more than the offered price, unless otherwise instructed in writing by the Buyer.
- The motivation of or personal information about the Buyer or seller, unless otherwise instructed in writing by the party to which the information applies or unless failure to disclose would constitute fraudulent, unlawful or unethical practice.
- The price the Buyer should offer or the price the seller should accept.
- The Brokerage shall not disclose to the Buyer the terms of any other offer.
Items that MUST be Disclosed in Multiple Representation Situations:
The Brokerage shall have a duty of full disclosure to both the Buyer and the seller, including a requirement to disclose all factual information about the property known to the Brokerage. In addition to this, any factual market information about comparable properties and information known to the Brokerage concerning potential uses for the property will be disclosed to both Buyer and seller to assist them to come to their own conclusions.
If handled properly by REALTORS® and Brokerages, buyers and sellers are all protected. This in turn, ensures an even playing field. However, the greatest public concern about multiple representation occurs when the Listing Brokerage represents both the seller and a buyer, and there are other competing buyers being represented by other Brokerages. In this situation, the other competing buyers may feel that they are at a disadvantage.
How REALTORS® Can Manage This Concern and Ensure Fairness to all Parties:
- Do not provide special commission agreements when Multiple Representations apply to competitive offer situations. This keeps all Buyers and Competing Brokerages on an even playing field.
- Have a specific multiple offer protocol, to ensure that all Buyer REALTORS® are informed when there are multiple representation situations (and multiple offer situations).
- REALTORS® representing buyers should seek to obtain information about the other REALTORS® and Brokerages who are submitting competing offers.
- Follow the above noted disclosure and non-disclosure rules set out by our governing body, RECO.
If you have any questions at all about multiple representation, please feel free to call me at 519-760-3227.
CLICK HERE for discover more information about multiple representation at RECO’s website.
CLICK HERE to learn more about current trends in the Guelph Real Estate market. My colleagues, Ryan & Beth Waller, wrote an outstanding article that was published in Guelph Today.
