Ask An Agent: Should A Realtor Represent Both Clients In The Same Transaction?

Kamran Ebrahimi is known for staying objective during a negotiation no matter who he’s representing.

Maybe it’s because the Property.ca sales representative once worked in the high pressure world of corporate business negotiations. As a result, his need to provide clients with the best deal possible comes natural.

This is why he’s great for this week’s question. If anything, just to see what he would say. 

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Should a Realtor Represent Both Clients in the Same Transaction?

From a realtor’s perspective, we have to provide fiduciary responsibility to our clients. Whether they’re the home owner or the purchase, I wouldn’t be willing to have my clients purchase anything without my view of the property and legal advice.

For that reason, I think there is enough red tape that already exists within a transaction. A client might need to have a lawyer review a condo board’s documents before purchasing a condo or have a home inspection before purchasing a home. It’s possible for a realtor to represent both sides of the same transaction and for it to remain objective and transparent.

As for negotiating the contract of sale, that falls on the realtor. If I have a client who is interested in a property and my office is representing the seller, I believe that’s fine because I have no direct interaction with the seller. However, if I’m representing both the buyer and the seller, this is where the dilemma comes in. Maybe my seller isn’t comfortable with me handing over their needs to my client because this is a relationship industry. If they don’t feel comfortable with a seller they just met for the first time, they may not feel comfortable with their negotiating tactics.

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This is why I always leave it up to the client to decide if they’re okay with me representing both parties. I always disclose to my buyer beforehand that I’m also representing the seller before we even discuss any contractual negotiations. I believe it’s the client’s responsibility to decide if they’re okay moving forward knowing what they know. This is already in place. They sign a contract saying they want to move forward with the offer acknowledging they’re aware there’s multiple representation.

The other big concern is the question of whether full disclosure is really provided when an agent is representing both sides. If you have a lawyer looking over the contract, both clients have the right to have a lawyer review the contract. In fact, we advise them to do so if they wish. If the lawyer feels there is anything to reassess, they can. Also, we have the status certificate from a condominium and a building inspection, both of which can be reviewed by the client. In the negotiation, the lawyer can help the clients assess if their best interests are being represented. Given these checks and balances, I think it’s still possible for a realtor to represent both the buyer and the seller and for the transaction to remain transparent.

As realtors, we understand what the neighbourhood’s like and what the consumer is looking for. Based on your lifestyle, we recommend which properties you should consider. We are not building inspectors or legal representatives. Some people may not be comfortable with me as an agent benefiting financially from both sides of the transaction. However, I would tell them I need to represent my clients to the best of my ability. Even though I’m getting paid by both sides, I’m doing my job for both parties.

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An argument could be made that I have an advantage because I know what the seller is looking for. As well, I know what the buyer is looking for. However, I can’t force the homeowner to decide what to do nor can I force the buyer to go higher or lower. Therefore, the transaction is always in the consumer’s control.

There have been cases when my client has wanted to purchase a home and knowing something about the space or neighbourhood, I advise against it. I’d do the same for both clients I represent since the vacancy rate in Toronto is so low that presenting the home to other potential buyers isn’t a challenge for me. As long as it’s priced right, it should sell. I would represent both clients in the same transaction. Even if I have information from the seller that makes the home not right for my buyer client, I would still advise my buyer not to buy that property.

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Everything will come up in a property inspection. If there’s a status certificate issue with the building, the lawyers will catch that. I would be doing a disservice to my client if anything came up that I didn’t advise them of. I might even lose them. Meanwhile, the buyer always has an option to place an offerjust as the seller has an option to refuse one. If I know my seller’s financial situation, my first responsibility is to get them the highest amount. If I believe that’s what a property should go for, that’s what I’m going to advise even if it’s my own buyer. If they don’t offer what the market asks, someone else will.

These days, clients have enough information that they can make their own decisions regardless of who I’m representing. The clients also have all their legal rights already, so there’s no reason for the government to step-in and disallow the practice. After all, I understand my clients better than whoever the agent is that I hand them off to. Plus, it’s always up to the buyer if they want to buy from my seller and up to my seller if they want to sell to my buyer.

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