Before signing an agreement to have a Realtor represent you in selling your home or buying one, they will ask you to sign a “Working with a Realtor” form. This is mandated so that clients and customers understand the relationship they’re agreeing to.

Unfortunately, I see a lot of people blindly sign contracts and acknowledgments. Although most of the forms used by Realtors in Ontario are standard forms that are there to protect your interests, it’s always a good idea to read through every contract to fully understand not only your own obligation, but also the responsibility of other parties involved. Don’t let anyone make you feel rushed before signing. If you feel uncomfortable sitting in silence while you read through the document, ask for a blank copy of the forms in advance so that you can review them at your leisure. The forms you will be required to sign are not top secret forms!

Now that the serious warnings are over, let’s dive in and review the definition of your relationship with your Realtor.

To start off, it’s important to understand that your Realtor is not the agent that you’re entering into an agreement with. When signing an agreement, you enter into an agreement to have a representative (the Realtor) of the agency (the brokerage) represent you. This is important to understand because your Realtor may not represent the other party in an offer, but the agency might.

A client relationship means that your Realtor has a legal responsibility to represent your best interests in a real estate transaction and maintain confidentiality. This type of relationship is formed in one of two ways:

  1. Signing a Listing Agreement to sell a home
  2. Signing a Buyer Representation Agreement

Clients seem to generally understand the relationship formed when it comes to listing their home, but sometimes fail to see the benefits of signing a Buyer Representation Agreement. The Buyer Representation Agreement is mandatory before making an offer on a property, but is often signed at the same time as the offer, which is not a great idea. I’d like to believe that most people are honest and wouldn’t steer you wrong (especially if they’re trying to win your business!), but in order to protect yourself, it’s always a good idea to be under contract before going to see any houses. Your Realtor is then required to disclose information that they know about properties you’re seeing and is required to act in your best interest (even if that listing you wanted to see isn’t going to get them as much commission!).

A customer relationship means that your Realtor must still act fairly, honestly and with integrity, but doesn’t formally represent you and has no legal obligation to represent you. This type of relationship is often formed when a buyer wants to make an offer on a home and isn’t being represented by a Realtor. The listing agent will enter into a “customer service” agreement with the buyer where they agree to draft up the offer and answer any questions, but they are still required to protect their client’s best interests – not the buyer’s. You usually pay nothing to have a Realtor represent you in a purchase (the seller pays commission), so sign a Buyer Representation Agreement and protect yourself and your interests in one of the biggest purchases you’ll make in your life!