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9/19/11

What is Dual Agency?

Q - I just bought a condo that my real estate agent had listed.  He said that our agency relationship has now changed to 'limited dual agency'.  What does that really mean?

A- Originally, your agent was looking out for your interests as the buyer.  He was also looking out for the interests of the seller of the condo.  However, when you put the two together, your agent cannot look solely after your interests as well as looking after the seller's interests.  There is a conflict of interest when the agent represents both buyer and seller. 

In this instance, it was your agent's listing.  However,  the situation would have been the same had you selected any condo that was listed by your agent's Brokerage.  The agency relationship was between you and the Brokerage (not the agent).  Where both parties are represented by the same Brokerage, the relationship has to be limited and both parties have to agree to these limitations, in writing, prior to making an offer or receiving an offer.  The limitations are as follows:

1. No disclosures can be made by the agent to buyer or seller regarding -

 a) Price and terms outside those contained within the offer
 b) The motivations to buy and sell
 c) Personal information unless it is part of the offer or if permission is received in writing

All known physical deffects of the property must still be disclosed to the buyer.

2. The agent must deal with the buyer and seller impartially.  This means that the agent cannot help you negotiate price.  The agent becomes a facilitator of the transaction and not a negotiator.

In a 'limited dual agency' situation, your real estate agent cannot tell you anything about the seller or the seller's situation or make any suggestions to you about the price you should offer.  Nor will the seller get any information about you or what dollar figure he should accept.  Both parties are on their own.

If you as a buyer wanted guidance from an agent, there is the option of hiring an agent from a different Brokerage to represent you.  In that instance, the new agent would often give a referral fee to the agent who had been showing you properties to compensate, to some degree, for the time spent.

This is the current situation regarding 'limited dual agency' in Canada.  There are discussions that, at some time in the future, changes may take place.

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