Who You Gonna Call?

Who do most of us call when we see a property for sale that we are interested in? The listing agent of course, who else? After all, we want the most accurate information and we want it now, isn't that what's most important? Well there are some interesting opinions on that, let's take a look at them.

In This Corner...

Well let's start with the arguments in favour of calling the listing agent. First, my obligatory disclosure; as a member of CREA® I can only speak for REALTORS®, as I do not know the guidelines non-members operate under. I know that member agents of CREA® (if your agent is a REALTOR®, s/he is a member of CREA®) operate under a strict code of ethics including complete disclosure when entering transaction brokerage (working for both parties) scenarios. This means that you are protected even if you choose not to accept services from that agent. Okay, how am I protected?
Well, assuming you are interested in the property and choosing to move forward in investigating and possibly purchasing the property, the first thing your agent is required to do is explain how agency works. This is done with a brochure called the Agency Relationships Brochure, and we are required by law to ask you to sign that we explained agency to you. The second thing we must do is explain exactly what kind of agency relationships (or lack thereof) we can have with you, and get your consent to whichever model you choose. This includes disclosing to you the pros and cons of each business model. The final step is up to you, you must choose which agency model you want to work under and sign acceptance of such.
So from the above scenario, you can see that whatever method you choose to move ahead, you will be doing so with complete disclosure of the benefits and drawbacks and hopefully in full understanding of the agent's duties to you and yours to him. And dealing directly with the listing agent ensures the most accurate and timely access to information about the property.
But (yes, there's always a but) there's a flipside to every coin. A couple other authorities have something to say about this.

In The Other Corner…

There just happen to be a few authorities who have something to say about the other side of this arrangement. They happen to be no less authorities than RECA (Real Estate Council of Alberta), the courts (throughout the world), and even God (Matthew 6:24). They all say the same thing; you cannot serve two masters. You see, if an agent works for both the buyer and the seller, there is a dilemma – how can I get the seller the best price, terms, and conditions while also getting the buyer the best price, terms, and conditions? In short it can’t be done.
Now this isn’t as bad as it sounds. In reality, the vast majority of real estate transactions involve both parties compromising or collaborating to ensure mutual satisfaction, which is really the same thing. The problem comes in because of the law in this country and many countries. The law here says that in a trust relationship (which is what most real estate relationships are) an agent (fiduciary) works for her client (beneficiary). This involves a duty called undivided loyalty.

Undivided Loyalty

Undivided loyalty, simply put, says that I must always work in your best interest, trying to achieve the best terms and conditions for you. If I am also working for the buyer for your property I have what is called divided loyalty.
That is probably about as deep into loyalty as I can get (we all rise to the level of our incompetence, and I think I’m there) but I think you get the picture.
The basic premise of the regulatory bodies’ arguments are that, if you are the Buyer, you should also have your own agent working just for you. Instead of calling the listing agent, go out and find a buyer’s agent who will look out for you with “undivided loyalty”.

So What To Do?

I don’t know the answer to that question. Both sides make some good arguments. I can only tell you that whenever I get into a transaction brokerage (working for both parties) scenario, it is always uncomfortable. I try to avoid it as much as possible, even though it means less commissions in my pocket. I would rather have clients have their own agents so that there is no doubt who I work for and where my duties lie.
I guess I subscribe to the regulatory model. So the next time you are interested in purchasing or leasing some commercial real estate, interview some agents with the intent of having them work solely for you as a buyer, you might be surprised at what you find.