By now you’ve probably heard of, if not seen, the CBC marketplace episode that exposes some real estate agents violating their fiduciary duty to their client for their own gain. Let’s break down exactly what multiple representation is first and then let’s look at why it happens.

What is it? Multiple representation occurs when one real estate company represents two clients in the same transaction. This is a perfectly legal arrangement and, if managed appropriately, can lead to a smooth transaction like any other. The inherent issue in this type of arrangement, however, is that the agent is in a conflict of interest because they stand to make both sides of the commission. In order to handle multiple representation carefully the agent must disclose the situation to all parties and must get their written permission to move forward. The agent then must follow five very specific rules, which are described in detail in the agreement that both parties signed:

  1. They cannot disclose the bottom dollar of the seller
  2. They cannot disclose the top dollar of the buyer
  3. They cannot disclose the motivation or personal information of either of the buyer or the seller
  4. They cannot tell the buyer what price to offer and they cannot tell the seller what price to accept
  5. They cannot disclose the contents of any other offers to their buyer

These are the rules that the agents in the video are clearly violating. The episode argues that agents are violating these rules (in one case disclosing the offer price of another offer on the table) for their own profit and at the expense of their clients.

Why does it happen? Often it is the buyer who requests this type of representation. There are a few buyers in Toronto who decide that they only want to work with the listing agent because they feel it will give them some sort of advantage in the end. The Toronto market is hot and it is understandable that most buyers just want to get a house for as low as possible. However, if the agent is following the rules, the buyer will not have any advantage over anyone else. Agents who violate these rules are no longer property representing their clients interests. Rather, they are operating for their own best interest.

If you have any questions about how multiple representation might affect your house search, get in touch.

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