Dual Agency BC
New Rules on Limited Dual Agency & Double Ending
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you purchase a property, call me today!
Recent changes to the Real Estate Council of BC’s disclosure requirements have been made to ensure that consumers have the necessary information to make informed decisions in a real estate transaction.
What is dual agency?
When a licensed real estate professional represents two parties, both the buyer and the seller, with competing interests in the real estate transaction it is known as dual agency.
One of the issues mentioned by the Real Estate Council is that many consumers do not fully understand the limitations on realtors when acting as a dual agent. Below we compare the difference between a realtor acting solely for you (sole agency) and if you agree that the realtor works for both you and the opposing party.
- DUAL AGENCY
- – A dual agent can’t give you any advice on what purchase price you should offer or accept, or what terms you should include in the contract.
- – A dual agent balances the duties they owe to you with the duties they owe to their other client. Because your interests and the interests of the other client conflict, it is impossible for the agent to fulfill all of the duties they would normally owe you.
- – A dual agent can’t make full disclosure to you of the material facts in their knowledge. That would breach their duty to protect their other client’s confidential information.
- – A dual agency must protect your confidential information, and the other client’s confidential information.
- SOLE AGENCY
- – The real estate professional representing you must be 100% loyal to you and put your interests above all others.
- – The real estate professional must avoid conflict of interest, and represent you solely as their client in a party. They hold a fiduciary duty to you and avoid any situation that would affect their duty to act in your best interests.
- – The real estate professional representing you must fully disclose all facts in their knowledge that could affect your decision making.
- – The real estate professional must protect your confidential information. They cannot reveal your motivation, the price that you are willing to pay or accept, or other confidential information without your permission.
Dual Agency Banned in BC in Almost All Cases
The problem that I see with dual agency is, how are you going to represent both parties in a neutral manner while protecting their best interests when the seller & buyer want completely different things. On one end, the seller wants the highest price, and on the other end the buyer wants the lowest price.
It seems that the Real Estate Council agrees with this as effective June 15th, 2018, they have now banned dual agency in almost all cases. They have stated that real estate professionals in BC must not engage in dual agency unless all of the following requirements are met at the discretion & approval of the council:
- The property is in a remote location.
- That location is under-served by real estate professionals.
- It would be impracticable (i.e. not possible) for the parties to have different real estate professionals.
Furthermore, all clients must agree to dual agency before a real estate professional can provide dual agency services, and they must be presented with the proper forms outlining the risks of dual agency.
Ultimately, the council has made it clear that dual agency is banned – and that there is no way of getting around dual agency in a market like Vancouver.
Understanding What It Means to be an Unrepresented Party
Some agents (we’re not all bad apples, but there are some…) that were trying to avoid being flagged for dual agency would instead have parties agree to be unrepresented parties.
One of the main issues that the Real Estate Council has voiced is the consumer’s apparent lack of understanding regarding what it means to be an unrepresented party, and they have therefore required a new form on disclosure of risks of unrepresented parties when dealing with these matters.
Below I’ve outlined what it means to be a client vs an unrepresented party when working with a realtor:
What to Expect as a Client:
- Loyalty, must put your interests first
- Duty to Avoid Conflicts of Interest
- Fully disclose relevant information
- Protect your confidentiality
What to Expect as an Unrepresented Party:
- No loyalty to you, loyalty strictly to their clients
- Real estate professional NOT acting in your interests, no duty to avoid conflict
- Full Disclosure NOT required
- No confidentiality
As a CLIENT, you will benefit from expert advice, oversight, and protection through either designated agency (more common) or brokerage agency. For access to the form, you can download it here: https://www.recbc.ca/pdf/forms/Disclosure-of-Representation-in-Trading-Services.pdf
For consumers who choose to conduct a real estate transaction without a real estate professional, licensees will provide you with the mandatory Council-approved “Disclosure of Risks to Unrepresented Parties” form for this disclosure.
https://www.recbc.ca/pdf/forms/Disclosure-of-Risks-to-Unrepresented-Parties.pdf
This form confirms that the licensee providing the form will not represent you in the transaction for a variety of reasons, such as the licensee is already acting on behalf of another client in the transaction.
It is ultimately the consumer’s decision whether they wish to be represented by a licensee; however, the Real Estate Council recommends all unrepresented parties seek the advice of a professional during any real estate transaction.
Just Get a Realtor to Help You With Your Purchase… It’s a Free Service
At the end of the day, with all these rule changes we really just have to bring it back to the fact that you will be better represented, protected, and your interests better looked after if you have a realtor representing you for your purchase.
With all of these forms, disclosures, and additional disclosures required to the sellers in these situations, if you think you’re going to get a “deal” because the listing agent wants to work with you then you should think again… because with all the risks of working with unrepresented parties/dual agents most realtors likely don’t want to deal with the headache of potentially losing their license or getting a hefty fine. Fines for real estate agents engaged in unethical practices were raised from $30,000 up to $250,000 per individual agent and $500,000 for brokerages, so you can see how earning a “double commission” for representing both parties but being hit with a $250K fine is not very appealing.
Our point: No more deals for a buyer by linking up with a dual agent.
In addition to dual agency not being an option anymore, why would you really want to be an unrepresented party? No full disclosure, no loyalty, no confidentiality – in a purchase that’s likely the largest asset you will ever own why would you want that kind of representation? Furthermore, hiring a buyer’s agent to work within your best interests is a FREE SERVICE! The seller pays the buyer’s agent the commission in a real estate transaction, and already agrees to this at the time they list the property.
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If you’re looking for a realtor to help represent you through the purchasing process, then give us a call at 604-765-0376. Prefer text? 604-319-0200 or email [email protected] to start a conversation. We’re here to help.
