Effective January 1st, 2013, CIR Realty has hung up their Transaction Brokerage License in favour of the more practical Designated Agency Model.   This change was long overdue, but since the Designated Agency Model was only rolled out about five years ago, we are one of the first in the City of Calgary to adopt it.

The vast majority of the public may not even know or care about what type of agency license their brokerage operates under, however there are some serious implications under law.  I have always said that we need to convert as soon as possible.   There were many grey areas that needed to be addressed before any decision was to be made by management, and the Real Estate Council has made some adjustments to the model since it was first rolled out, making it more practical.

What does this mean to the consumer?  Let’s take a closer look.

Transaction Brokerage Model

All agents within a brokerage are deemed to have the same knowledge of, and fiduciary duties to the client.  This means that when another agent from the same office is acting for the other party, both agents must take a facilitatory position, rather than advocating for one side or the other.  This is because the brokerage is deemed to have agency with both parties. This means that they may facilitate the transaction but not offer any opinion  aside from providing all facts to their client so that they may make an informed decision.  Not every one is completely comfortable with this model since they want their agent to advocate for them at all times.

Designated Agency Brokerage Model

Where a brokerage is licensed under the Designated Agency model, it is understood that while the listing is still owned by the brokerage, the fiduciary duties have been assigned to the listing agent rather than that of the brokerage.  Other agents in the office are deemed not to have any knowledge of, and information is not shared between other agents in the office.   I believe this to be the better model since both parties will have someone advocating for them, unless the same agent is acting for both the buyer and the seller.

In the case where the same agent represents both parties, both the buyer and the seller, must be advised of their rights early on in the relationship and both must agree in writing to have their agent act for them under a Common Law Transaction Agreement.  

Under a Designated Agency Brokerage Agreement the dual agent must act in a fair and impartial manner, provide all necessary facts to each side to assist them in making an informed decision with respect to the transaction, and share any information which may be vital, such as the ability of the buyer to obtain financing.   They must not share any confidential information such as confidential personal information, what price either sided is willing to accept or their reasons for buying/selling.

Where one agent is acting for both parties, and both parties cannot simultaneously agree on a Common Law Transaction Representation, the brokerage is obligated to advocate for the party with whom it first was acting under a written service agreement. The other party may choose to act on their own, under a written authorization referred to as “Customer Status”, or ask to be referred to another agent to represent them.

It should be noted that most sellers do not object to concurrent representation for the simple fact that when they listed the property, they had every expectation that their agent may well be the one to  bring in an interested buyer, and that they should advertise the property with every intention of doing so.  By not allowing concurrent representation, the seller may hamper their agents efforts to sell the home.

Conversely, many buyers feel that a dual agent may be preferable because while the agent  may not be advocating for them, neither is he/she advocating for the seller, and so there is a perception that the  transaction could be negotiated under more reasonable terms for them.

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