First and contrary to common belief, REALTORS® are not agents. The Brokerage we work for is the "agent," we are either Salespersons or in my case I am a Broker. Multiple Representation is when a real estate Brokerage and not just a singular Salesperson or Broker represents both a Buyer and a Seller in a real estate transaction and there are different examples as to how this can play out.
Few consumers understand that in legal terms there is a difference between being a client versus a customer. When we enter into a Listing Agreement for a Sellers property, they become a client and we have a fiduciary duty to look out for their interest(s). Similarly, when we enter into a Buyer Representation Agreement with a Buyer(s), we have established them as a client and similarly there is a fiduciary duty to protect their interest(s) as well. If a party to a real estate transaction is merely a customer and not a client, no fiduciary duties exist. Yes we must act honestly and truthfully with respect to dealings with a customer but we are not responsible for looking out for their best interests.
The simplest example of Multiple Representation is when I have a Buyer for one of my own listings. This is obviously Multiple Representation as not only myself but the Brokerage is representing both the Buyer and Seller in this transaction.
If a Salesperson from my Brokerage represents a Buyer for one of my listings it is once again Multiple Representation as the Brokerage is representing both the Seller and the Buyer in the same transaction
Here is where it gets a little trickier. If two Salespersons from my Brokerage are representing two different Buyers for the same property that is listed with not only with our Brokerage but any other Brokerage such as ReMax or Century 21 etc. this is still Multiple Representation as our Brokerage is representing two different Buyer clients for the same property.
When in Multiple Representation, the Brokerage must not share information or act in a manner that would compromise either party Seller or Buyer. This includes not sharing the degree of motivation that a Seller or Buyer may have, why the Seller is selling, how much the Buyer is willing to pay or the Seller is willing to accept etc.
Every time I list a property for sale for a Seller client or when working with a Buyer Client I always make it a practice to explain in detail how these various representation scenarios may unfold. It's not only a good business practice but disclosure of this information it essentially the law and it goes a long way to avoiding any misunderstandings during the transaction and or afterwards.
In my next post I will delve into this matter further especially as it relates to situations when Buyers are in multiple offer situations which has become a regular occurrence in our market of late. On the meantime if you should have any questions please do not hesitate to Contact Me. My knowledge is always shared openly and freely.