In the real estate business in Canada, an individual must work through a real estate brokerage. This relationship with a brokerage is referred to as “Agency.” Real estate brokerage employs licensed agents who must be members in good standing of their area’s real estate board, the provincial associations, and The Canadian Real Estate Association (CREA). This membership system is a guarantee that licensed realtors are bound by their board’s laws and code of ethics. You can be sure to have a great experience by signing an agreement with a realtor to represent you. These representation agreements are of many different types, and there is no obligation as to what kind you should enter into. What is important is not the type of agreement, but what each type involves. It is completely up to an individual to choose any of the following four agreements based on their unique circumstances and business needs.

1. Seller (Vendor) Representation
This refers to the agreement when a real estate brokerage or their members are representing an individual who is selling the property. In a seller representation, the realtor’s job is to work with the seller and provide advice on how to get the best price for the property. The realtor must disclose any pertinent information about the property, the market and the potential buyer. If the realtor has information on a buyer that may be able to offer a better price, he/she is bound by law to disclose that information to the seller.

2. Buyer (Purchaser) Representation
This refers to the agreement when the real estate brokerage or their members are representing an individual looking to buy a house/property. As part of the agreement, the realtor will attempt to understand the needs of the buyer and help him/her in getting as close to the desired property as possible. The realtor will act in good faith and advise the customers on the pros and cons of a property, a neighbourhood, or a development. The realtors are bound by law to keep all buyer information private, including the maximum price the buyer is willing to pay for a property.

When representing a buyer, a realtor must ensure that the client not only gets a property within his/her defined budget but that it also ticks as many boxes as possible. A good realtor can use his expertise to help you make offers on the right property. For example, instead of letting go of a great house because it does not have a powder room, the realtor may guide you on making an offer that, if accepted, can save you the money to build one yourself.

Most standard agreements tend to provide a greater degree of protection to the seller. A good agent will ensure that as a buyer your rights are protected as well by paying attention to the way the contract is drawn up.

The buyer’s brokerage is not paid by the buyer. If a sale is made, the seller pays his brokerage, who then pays a certain agreed-upon percentage to the buyer’s brokerage.

3. Multiple Representation
Multiple representation refers to an arrangement when a brokerage is representing both a buyer and a seller. In such cases, the brokerage must disclose this information to both parties, and they must provide their informed consent for this arrangement.

4.Customer Service Agreements
In addition to the three types of representations, people have the choice of entering into a slightly different representation agreement referred to as the CSA or Customer Service Agreement. In a CSA, both the brokerage and the client are less committed to each other. The terms of the CSA arrangement are different. For instance, bound by a CSA, a brokerage/realtor will still help you search properties and make offers on them and even help with any paperwork. But they will not necessarily provide advice in the same way as they would to a client. Customer service agreements are more suited to people who know the market and the kind of property they are after.

Ensure that you have a good understanding of what each type of agreement entails and how the legal clauses will affect you and your business needs. When in doubt, seek expert legal help before signing your name on that paper.