What’s a Buyer Customer Service Agreement ?

Let’s say you’re a prospective buyer. You’ve been to an Open House, or maybe you’ve seen a listing you liked on Realtor.ca and contacted the listing agent to see it.  You talk to the listing agent about making an offer and he or she drafts up the paperwork; the offer is presented, the negotiations take place, and hey, you’ve bought yourself a new house!

Most people would assume that the agent representing you in this transaction is your agent and that you’re their client. And they’d be wrong.

We are, as realtors, statutorily required to have a contractual agreement with a buyer before we can present an offer. If we’re acting for them and them alone, that’s called a Buyer Representation Agreement. In that scenario, they are our clients and we owe them the highest fiduciary duties. (Fiduciary duties are the same duties held by doctors and lawyers: it’s a duty to put their interests ahead of our own, and act in their best interests.)

But once we have that relationship with a seller, we can’t have it with anyone else. So if you decide to work with an agent who is already representing a seller, ie. the listing agent, the contract that agent will sign with you is different. It’s called a Buyer Customer Service Agreement,  and that’s not remotely the same as a Buyer’s Representation Agreement.

In customer service, (and this is important): I do not have an obligation to get you the best possible deal on this property. I do not represent your interests in this transaction. I already have a client: the sellers.  My primary duties are to them. If you are my customer, I have to answer your questions honestly and I have to disclose material facts but by law, I can’t disclose their bottom lines to you or yours to them.

When lawyers act for both parties, it is considered a conflict of interest that requires express consent from both sides. Lawyers are required to disclose everything to both parties once they do. Both sides are their clients.

But in real estate, it’s different. Having a customer and a client is not considered a conflict of interest; it’s called “multiple representation,” or  “double-ending.” The conflict of interest is avoided because we do not have divided loyalties; our loyalties are to our clients and our clients only.

I had a friend who bought a house via an agent she met at an Open House. She found out later that she had paid $ 40,000 more than a previous buyer had offered, and that the sellers had accepted before the deal fell apart.

“How could this agent act for me and not tell me that they were willing to take $ 40,000 less than I paid?” she asked, and believe me, she was angry.

I had to explain that she was a customer, not a client, and that the agent was behaving properly. Remember, we are  statutorily required not to disclose a seller’s bottom lines in this kind of situation. Clearly my friend  had no idea when she signed the buyer’s customer service agreement that that’s what it meant: she thought the agent was her agent too.

Now, there’s nothing wrong with an agent double-ending, or with a buyer being a customer, as long as the buyer understands that they are not getting the same services as they would if they had their own agent. An agent who is acting for the sellers as well as the buyer will not be able to prepare a comparative market analysis for the buyer the way he or she probably did for the seller; they can’t really advise you on price.

If you think about it, that makes sense: every dollar you save is a dollar less to the seller, and remember: the agent’s primary duty is to the seller, not to you.

And when it comes to due diligence, you’re pretty much on your own.

I personally avoid double-ending. I  was a  lawyer for too long to be comfortable with all the possible conflicts of interest. But lots of realtors do it, and manage to stickhandle those conflicts ethically.

Oh, one other thing. Buyers often think that if they use the listing agent as “their” agent they can get a lower price because the agent will reduce their commission to get the deal done. Just remember that the contract between the listing agent and the seller as to what the listing agent will get paid  on commission is a contract between them, not you.  I’ve had listings where I’ve put too much time and money into staging, and photographs, and Open Houses, and hand-holding, to even consider reducing my commission, and  I don’t have to. My commission has nothing to do with you. Caveat Emptor.

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