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Buying Real Estate in Ontario

In the majority of real estate transactions, Sellers pay a Realtor® a percentage of the sale price of their house to obtain an acceptable offer. This amount is not payable until the deal closes; that is when title transfers from the Seller to the Buyer. The commission is paid to the Listing Brokerage when title transfer to the new owner occurs. The Listing Brokerage then pays a portion of that commission to the Brokerage representing the Buyer (Co-operating Brokerage). 

This system of Realtor® remuneration and cooperation in concern to real estate transactions has been in place for more than a century. 


Today, Buyers enjoy the benefit of receiving "client representation" by their Realtor® of choice. At the same time, they still enjoy a real estate environment that doesn't bill them directly. The majority of Realtors® do not charge buyers directly for any of their services. Because of this, often Buyers believe that they're not paying for the services of a Realtor®; nothing could be farther from the truth. The cost of the Buyers Realtor® is part of the purchase price of the property. A Buyer does pay for the services of a Realtor®, just not directly; this is important to remember as a Buyer when you're considering the type and quality of representation you're getting.


Real Estate buyers in Ontario have three options when it comes to working with a Realtor®: Buyer Representation, Multiple Representation and Customer Service. Regardless of which one you choose, the obligation of a Realtor® to be fair and honest never goes away.


The Real Estate and Business Brokers Act 2002 is clear; regardless of the kind of representation you choose, it must be agreed upon between you and the Brokerage at the earliest opportunity.


Buyer Representation

The Real Estate Council of Ontario (RECO) and the Realtors Association of Hamilton Burlington (RAHB) recommend that Buyer Representation Agreements be signed as early as possible when working with a Realtor®.


The Buyer Representation Agreement is a contract between a Buyer and a Real Estate Brokerage. The Agreement will state that:

  • The Brokerage is representing you as a Buyer
  • The time period the Agreement covers.
  • The amount of remuneration (i.e. commission, flat fee) that the Brokerage will be receiving and under what circumstances they're entitled to receive it. (ie. successful completion of a transaction)
  • It can also explain who is responsible for paying the commission. (ie. Listing Brokerage, you directly, etc.)


This contract also outlines the fiduciary duties owed to you by a Realtor®. What are Realtors® fiduciary duties?


Fiduciary Duty means a legal obligation of one party to act in the best interest of another. The obligated party is typically a fiduciary, that is, someone entrusted with the care of money or property. Also called fiduciary obligation. In Real Estate, when a Brokerage enters into a contract with a Seller, aka listing agreement, they have a legal obligation to act in the best interest of the Seller. The same is true for the relationship between the Buyer and Brokerage when a Buyer Representation Agreement is signed.


Agent's Fiduciary Duties: Disclosure, Loyalty, Confidentiality, Accountability, Obedience

What this means is that when you enter into a Buyer Representation Agreement, your interests must be # 1 with the Realtor® representing you. It is a contract and once signed, you should rest assured that the Brokerage and their sales representative are making your home buying needs a priority.


Customer Service

There are times when someone doesn't feel comfortable entering into a contractual relationship with a Brokerage. Under those circumstances, Buyers must still be treated fairly and honestly by the Realtor®.


It's not unusual to see Customer Service agreements in new home sales, leases or any trade where the Seller is synonymous with the Brokerage. The Listing Brokerage may be an extension of the Seller and cannot reasonably fulfil contractual obligations with a Buyer. Regardless, when dealing with Buyers, they must still be "fair and honest" at all times. 


Multiple Representation

It's a common misconception that Multiple Representation is a term used solely when an individual sales rep is representing both a Buyer and Seller. Often referred to as "double-ending." Even though this is an example of Multiple Representation, it's not the most common instance.

In Ontario, "Agency" is assigned to the Brokerage, not the individual Sales Representative. This means that large franchises with hundreds of sales reps can experience "multiple representations" frequently. The Realtors® involved may not even know each other. Yet their Brokerage has contracts in place to represent both the Buyer and Seller.


When this happens:

  • Both the Buyer and Seller have to agree to the Multiple Representation in writing.
  • All parties must also agree on what "confidential" information will be shared as well.


Code of Ethics

The Code of Ethics, part of REBBA 2002, requires REALTORS® to disclose in writing the nature of the services they are providing as soon as practicable. It also encourages REALTORS® to obtain written acknowledgement of that disclosure. The Code also requires REALTORS® to enter into a written agency agreement with any sellers or buyers they are representing.