Team Kretz

Team Kretz is keeping you up to date on a very controversial topic.
We find that an informed client will make the real estate process easier to understand.

Understanding the pros and cons of multiple representation

What is multiple representation?

Multiple representation also known as dual agency, is when more than one party is being represented by the same brokerage. This can be with either the same agent or with each party having a different agent within the same brokerage. This is more commonly found with a buyer and seller working with the same brokerage, but it can happen with multiple buyers who are interested in the same property.

Is multiple representation allowed?

Not in Ontario unless both parties give informed consent in writing to their brokerage. Without written consent from both parties, the brokerage must release one.

What does the brokerage have to disclose in a multiple representation scenario?

The parties must be made aware of the possibility of a multiple representation before entering into a representation agreement. Further, they must also be informed that their consent is required in writing, and what service and service levels will be provided by the brokerage in multiple representation. As soon as they enter into a multiple representation scenario and before any purchase offer is made the brokerage must let all parties know that they intend to represent more than one client. A full explanation of how the brokerage’s obligations to promote and protect each client’s interests will differ compared to if they only represented one client in the trade.

What are the pros and cons associated with multiple representation?

Pros

  • Many brokerages will reduce the total commission to be paid to a point lower than if there were two different brokerages involved. This is not required and does not happen automatically.
  • Some will say that dealing with one brokerage improves administrative tasks, logistics and communication, but brokerages tend to work together well so if there is a benefit it is minimal.
  • Multiple representation may lead to improved knowledge about the condition of the home on the part of the buyer.

Cons

  • Since a seller wants to sell for as high as possible, and the buyer wants to purchase for as low as possible, it is difficult for the brokerage to honor their duty of meeting both clients’ best interests.
  • Buyers who must rely on the agent or brokerage for guidance, and in so doing must share confidential information which may impact their bargaining position, may face particular challenges.
  • It can be challenging to understand when a broker or salesperson has to share information and when they don’t. Having someone dedicated to your interests could reduce misunderstandings, assumptions or guesswork. For example, the brokerage may be required to disclose facts about the property to the buyer that would not necessarily be disclosed if they worked with separate brokerages.

 

Should you agree to multiple representation?

As a client, your needs and expectations must come first. You always have a choice, so don’t be afraid to exercise your right to disagree to dual agency if you are uncomfortable with the arrangement or it doesn’t support your objectives.

Please contact Darlene or Paul if you would like more information on any of your real estate needs.


 
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