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Toronto Real Estate Blog
Understanding Agency Law
Wednesday, 18 September 2013, 07:13:35 AM

If Buyers drive past a For Sale sign and say “Should I call the listing agent and find out what the price of the home is?” As innocent sounding as this question might be, this may not be in your best interest to do so.

Under agency law, the listing agent’s primary loyalty and duty is to the seller of the home. They have signed a contract and are hired by the seller to represent their interests and are being paid to do so.

So what does this actually mean for you as buyer who has contact with the seller’s agent with either questions or possibly even meeting them while viewing the home?

First of all you need to know what the seller’s agent can and cannot do for any buyer!

I know there may be buyers in today’s marketplace who prefer to act on their own and find the property themselves without the use of a buyer’s agent. When they do eventually find a home, these buyers may also decide to use the seller’s realtor to negotiate a transaction on their home.

One of the ways to calculate the value of a home is by doing what realtors call a comparative market analysis (CMA).  Completing a CMA to find out what the home is really worth is the first step to understanding the market value. However the listing agent will prepare a CMA for the buyer only if they request it. They will not do it automatically! Furthermore… if they do prepare this CMA they cannot, by agency law, use that CMA to provide advice on what the purchaser should offer or what the property is really worth!

So why is the listing agent not allowed to do this? Well… it might give the buyer a negotiating edge and violate the listing agent’s duty to put the interest of the seller first!

As a buyer in this active real estate market you want to ensure you have a real estate agent working for you. To ensure they are advocating for your best interests and giving you all the information so you can make the most informed decision.  Quite often buying a home is the single largest financial transaction most people complete and it’s imperative to have someone representing your best interests at all times.

Categories:Home buying tips  
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