When you work with Goldfarb Real Estate Brokerage for the purpose of buying property, we encourage you to enter in a client relationship with the brokerage. As indicated in Working with a Realtor, it is only in a client relationship that we can offer you the highest form of obligations, i.e., a duty of care in everything we do for you, as well as general and fiduciary obligations, and thereby protect your best interests.
This relationship is formalized in a Buyer Representation Agreement. The main purpose of this agreement is to establish an exclusive authority to the brokerage to locate a suitable property for you. Indeed, our Code of Ethics requires that this relationship be put in writing prior to any offer being made:
14. If a brokerage enters into a buyer representation agreement with a buyer and the agreement is not in writing, the brokerage shall, before the buyer makes an offer, reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the buyer for signature. O. Reg. 580/05, s. 14.
Let’s review key elements of this agreement in more detail.
Key Elements of the Buyer Representation Agreement
- Granted in the brokerage's name to locate a suitable property.
- Start and end dates of the contract.
- Buyer initials if contract spans more than 6 months.
Property Type/ Location
- A general description of the property being sought, while granting the brokerage full authority to seek out all relevant properties.
Buyer Representation/ Warranty
- This clause is bolded for emphasis, as this warranty relates to the Buyer not being a party to a buyer representation agreement with any other registered real estate brokerage.
- Buyer agrees to the brokerage receiving commission offered by the listing brokerage or by the Seller - this amount will be disclosed at the earliest practical opportunity.
- Note that this does not create a representation (agency) relationship with the Seller.
- Buyer remains responsible for the entire commission should no commission be paid by the Seller or Listing Brokerage or should there be any shortfall between the contracted amount and the amount actually paid by the Seller or Listing Brokerage (plus applicable taxes).
- Buyer remains responsible to pay commission if the transaction contemplated by the agreement is not completed, if this non-completion is due to the Buyer's default or neglect.
- Commission payment terms apply after expiry of the representation agreement for the duration of the holdover period (60-90 days), unless the Buyer enters into a new representation agreement with another brokerage, commission amount would be reduced by portion payable to the new Buyer Brokerage.
- Various disclosure and related procedures concerning representation, multiple representation and customer service.
- This clause is an important disclaimer that is included regarding the physical condition of the land or improvements.
- The brokerage and its representatives are not qualified regarding the physical condition of either land or improvements and the buyer indemnifies the brokerage regarding liability for defects - latent or patent.
- Information supplied by a Seller/Landlord or Listing Brokerage is not warranted as accurate.
- Such matters fall to the Buyer's risk (caveat emptor) and appropriate inquiries must be made (e.g., home inspection).
Referral of Properties
- Not all properties are available for sale on the MLS system.
- Should the Buyer come across a property on their own that is of interest, then the Buyer should inform the brokerage, which can then undertake to show the property.
- If such is not done and a sale is negotiated directly with the Seller in relation to such a property, the brokerage is owed the commission as per the representation agreement.
- The Consumer Reporting Act requires that every person be notified if a consumer report may be referred to about a transaction as such information may be required in order to secure financing.
Some important notes regarding the foregoing information:
- You should never feel forced and we will never coerce you to sign a representation agreement with us. We are happy to have the opportunity to work with you for a trial period before deciding whether you would like to continue and formalize the relationship in an agreement;
- We will never try to hook you into a contract you are not comfortable in signing.
- Even when you do sign an agreement with us, if at any time, you want to cancel the contract, we will immediately proceed to process that paperwork.
- We will never force you to work with us if you do not want to.
- While there is a generally agreed upon prevailing rate of commission for a co-operating brokerage in the community, commission is negotiable should be commensurate to the value we provide to you. The good news is that most of the time, a Buyer will never have to pay for our services as the Seller or Listing Brokerage will pay. Because circumstances might arise where that might not be the case, i.e., the Seller is not offering the same amount of commission to the Co-Operating Brokerage , then let’s have an upfront discussion about these types of situations and come to terms with a scenario that both parties agree to before signing a Buyer Representation Areement.
- It is important to disclose if you have already formally or informally entered into a Buyer Representation Agreement with another Brokerage. The reason is that per our Code of Ethics, we would be unable to communicate with you for the purpose of trading in real estate, and instead, we must communicate with you through the brokerage that is representing you. It therefore follows that we would be unable to enter into a Buyer Representation Agreement with you.
What is important to us and our main objective is to make sure you have the best possible experience, that you are in the most capable hands, and ultimately, that we build a long term real estate relationship with you.
Beyond specific obligations as outlined in the listing agreement, there are additional basic obligations imposed by law and implicit in the relationship that we uphold and are detailed below.
Basic obligations imposed by common law and in the representation agreement
Locate Property - Promote Buyer's Best Interests
To use best efforts in locating a property in the specified market area(s) that meets the material requirements identified by the Buyer so as to promote the interests of the Buyer.
Act as the Buyer's Representative
Subject to the provisions of the agreement related to a change in representative capacity, to act as only the Buyer's representative.
Fulfill Fiduciary Obligations
To fulfill its fiduciary obligations of loyalty, confidentiality and of full disclosure of all conflicts of interest that may arise between the Buyer's interests and those of the brokerage and its representatives, sellers or competing buyers.
Exercise Reasonable Care and Skill
To exercise reasonable care and skill in the performance of the agreement.
Discover Relevant Facts
To use best efforts to discover relevant facts pertaining to any property for which the Buyer is considering making an offer.
Obtain Expert Advice
To advise the Buyer to obtain expert advice on matters of importance to the Buyer.
Keep Buyer Informed
To keep the Buyer fully informed regarding the progress of the transaction.
Negotiate Favourable Terms
To assist the Buyer in negotiating favourable terms and conditions, and in preparing a legally binding Agreement of Purchase and Sale.
Advise Seller - Brokerage is Representative of Buyer
At the earliest reasonable opportunity, to advise any Seller in whose property they Buyer is interested that the brokerage is the representative of the Buyer.
Obey Lawful Instructions
To obey all lawful instructions of the Buyer.
No Sub-Agency Without Consent
Not to appoint another brokerage to act on behalf of the Buyer as sub-agent without the prior written consent of the Buyer.
Seek Out Available Properties
To seek out and advise the Buyer in a timely manner of available properties in the market area which may meet the Buyer's requirements, including those listed with other brokerages, those "for sale by owner" and other available properties known to the brokerage or its representatives.
Disclose Relevant Facts
To disclose, in a timely manner, to the Buyer all relevant facts known to the brokerage or its representatives affecting a property or transaction.
Timely Presentation of Offers and Counter-Offers
To present, in a timely manner, all offers and counter-offers to and from the Buyer even when a property is already the subject of an Agreement of Purchase and Sale.
Disclose Competing Offers
To disclose to the Buyer the existence and terms of any competing offers known to the brokerage or its representatives for a property in which the Buyer is interested.
Comply with Regulatory Requirements
To comply with all provisions of the REBBA, 2002, and its regulations, and the rules and by-laws of the TREB, in addition to all other applicable laws and regulations
Buyer Customer service
As previously discussed, provincial real estate legislation clearly distinguishes between a client and a customer. The first thing you will need to decide is whether you are interested in buyer customer service or buyer representation services from us.
A customer is someone who has entered into some form of service agreement with a brokerage, but is not represented by the brokerage. A customer, while not owed fiduciary duties, must be dealt with fairness, honest, and integrity.
Buyer Customer Service Agreement
The Buyer Customer Service Agreement establishes a contract between the brokerage and the Buyer for customer services only. The form, designed for situations when the Buyer is not represented by the brokerage, achieves several objectives:
- COMMISSION: Confirms that no commission is paid for customer service provided by the brokerage, unless specifically set out in writing.
- REPRESENTATION AND CUSTOMER SERVICE: Confirms in writing that the brokerage is not the representative of the Buyer.
- States that the brokerage is not liable for any defects, whether latent or patent to the land or improvements. Information provided by the seller may not have been verified and is not warranted by the brokerage.
- The Buyer acknowledges having been advised to make his or her own enquiries to confirm the condition of the property.
An example of when this could happen is a Buyer is seasoned and does not need help locating a property, verifying conditions of the property, and advice, counselling, or expertise to purchase real estate and is therefore customer service will suffice.
Our Code of Ethics requires that this relationship be put in writing prior to any offer being made:
15. If a brokerage enters into an agreement with a customer in respect of a trade in real estate and the agreement is not in writing, the brokerage shall, at the earliest practicable opportunity, reduce the agreement to writing, have it signed on behalf of the brokerage and submit it to the customer for signature. O. Reg. 580/05, s. 15.