Effective September 1, 2009, Royal LePage Foothills is changing the relationship our Realtors have with their customers and clients from a common law relationship to a designated agency relationship. What this really means is that our Realtors will now sign a non-exclusive agency relationship with buyers which outlines their duties to their buyers.
From the publics perspective, the primary difference is when a Foothills Realtor shows a Foothills listing and the listing in question is not their own listing, the buyer is treated in a non-exclusive relationship with our Realtor. That means they are treated in the same manner as if they were showing them listings from other companies. We believe this is a more realistic approach to the buyer and is exactly what the buyers expect from their Realtor.
This relationship changes when a Realtor is showing his or her own listing and he/she now becomes involved in transaction brokerage, where the brokerage becomes a facilitator for the transaction and treats both parties neutrally and equal. In the current common law relationship, when a buyer or seller indicates they do not wish the Realtor to act in the same trade, the obligation of the brokerage is to move the buyer to another real estate brokerage firm as we still must be neutral with another Realtor in our company.
Under Designated Agency, and because each Realtor has a non-exclusive agreement with the buyer, another Realtor in our firm can handle the transaction for the Realtor who is acting for the buyer.
This is significant in that our company can offer the same quality of service to both parties, and in the case of our Realtors acting in a trade of our own listings, the brokerage will have assigned two associate brokers in our company to act independently for the buyer and the seller. This now means all parties to the transaction have independent advice and all parties are able to seek advice, whereas this is not possible under the current common law relationship.
We believe the public is already under the impression that the designated agency relationship is the way their Realtors are expected to act for them, and it is quite likely that this change is more of an expectation than a real change in our legal representation.
As designated brokerage and agents we must do the following for our buyers and sellers:
– Offer our best advice … it should be noted that advice currently must be guarded under our common law relationship, whereas advice in a non transaction brokerage situation can always be given, and when it is in transaction brokerage we now dedicate two associate brokers to offer advice… more high level people working for our buyers and sellers in a meaningful way.
– Obey lawful instructions of the buyer and seller. These duties have not changed from common law or designated agency.
– Fulfill fiduciary duties of loyalty, confidentiality and full disclosure although this has not changed in the switch to designated agency, there are more protections to the buyers and sellers under designated agency as each non transaction brokerage situation is treated in a different way.
– No need to appoint another brokerage… under common law, the seller or buyer can request a Realtor not to act on behalf of both parties. The option is then to move the buyer to another brokerage; this is no longer required under D.A. as a buyer can be assigned to a Realtor within the brokerage and associate brokers are assigned to both the buyer and the seller to ensure all advice is given that is required and the transaction is completed in fairness to both parties.
– Exercise reasonable care and skill. This has not changed in the D.A. shift; the Realtors and the Brokerage must act with skill and care.
– All other duties… in all the other cases, our Realtors are bound by the terms and conditions of the Real Estate Act of Alberta to ensure all information and all offers made are handled with all the information relevant to the buyers and sellers. The key distinction is when our Realtors act for their buyer, they are basically making sure the buyer is treated as equally as the seller in every case. The Realtor acting for the seller [except when they act for both parties], treats all potential buyers in the same manner, whether they are with Foothills or not, and this is a major shift in the relationship and is one that is very important to the seller.
It is the belief of the brokerage that Designated Agency is the expectation of the buyers and sellers. We put this change and expectation in the form of a designated brokerage agreement for buyers and a designated agency listing agreement for sellers.
If you have any further questions regarding Designated Brokerage feel free to contact me.
Nevin Van Nest . Realtor . Royal LePage Foothills
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