Remember your duty to your buyer client
The Fourth House
The buyer signs a buyer representation agreement including specifics as to the type of property wanted, namely a two-storey residential home in the $425,000 to $500,000 range in the West Ridge area of Anycity. The salesperson locates four listed properties meeting those specifications, three of which offer co-operating brokerages a commission ranging from 2.5% to 3%. The fourth is attractively priced, offers the same amenities but with a lower commission of 1.5% to the co-operating brokerage. The salesperson shows the three properties only and obtains an acceptable offer. Prior to closing, the buyer discovers that the fourth house was deliberately withheld and lodges a complaint with RECO. Disciplinary action is subsequently taken against the registrant.
Article 19 REBBA 2002
19. If a brokerage has entered into a representation agreement with a buyer, a broker or salesperson who acts on behalf of the buyer pursuant to the agreement shall inform the buyer of properties that meet the buyer’s criteria without having any regard to the amount of commission or other remuneration, if any, to which the brokerage might be entitled.
(reprinted from Introducing REBBA 2002:Â The Real Estate and Business Brokers Act 2001, published by the RECO.)
Members are reminded that they have a duty to their buyer client to show their buyer all properties that meet their requirements, even though it might mean a lower commission for you.
This wouldn’t happen if the agent filled out the commission portion of the Buyer Agency Agreement. I don’t know how many agents that I’ve talked to who say that they leave this blank. They are then relieved of the cumbersome job of trying to tell the prospective client that he is responsible for any amount under that percentage. I have always filled in that portion, and easily explain to the buyer that it gives me confidence and the impetus to show him all properties I come across that fill his needs, whether they are listed for 2 1/2% commission or not listed at all (FSBO). There is some chafing of course, and when they ask if I would really charge them for buying a home, I tell them that’s the only way I’d find them a home. They pay whether it’s through the seller or directly from them.
That’s right. The difference between the 1.5% commission which would have been paid, and the 3% on the buyer agency agreement would have had to have been made up by the buyer.
It is up to the buyer whether they want to see the last house with the 1.5% commission and owing a further 1.5% to their sales representative, or to go to the other listings.
Karen you could not be more incorrect in stating that it is up to the Buyer if they want to see the fourth property. Under the Buyer Agency contract your fiduciary duty is to show your client all properties that meet their criteria. The contract does not say the agent will only show you properties that are deemed satisfactory to the Realtor based on the commission offered to the co-operating agent. It is the Buyer’s agent responsibility to explain the fine points of the Buyer’s agency agreement before the Buyer signs the contract.