Alberta Real Estate
I’m selling my home, and the potential buyers also want to use my real estate professional to represent them. Is that allowed?
Yes, that’s allowed. The situation you’re referring to is called transaction brokerage. Transaction brokerage is a service option when your real estate professional represents a buyer client interested in purchasing the property in which you are the seller client. The reverse is also true – transaction brokerage is a service option when you’re interested in buying a property and the property’s seller is also represented by your real estate professional.
When a real estate professional works on behalf of only one client in a transaction – the buyer or the seller – they have legal responsibilities, which include:
- undivided loyalty to their client
- acting in their client’s best interest at all times
- the duty to avoid conflicts of interest
- the duty to disclose conflicts of interest when they arrive.
Transaction brokerage changes the services your real estate professional is able to provide to you and to the other party in the transaction. A real estate professional who is working with both the buyer and the seller in a transaction cannot fulfill all of their legal responsibilities because there is a conflict between the best interests of the buyer and those of the seller. The buyer wants to pay as little as possible for the property, while the seller wants to sell their property for the highest possible price. It is impossible for a real estate professional to advocate for and represent the best interests of a buyer client AND seller client in the same transaction.
This is when and why transaction brokerage becomes an option. In transaction brokerage, the real estate professional will provide facilitation services to you and the other party. These services include:
- helping the buyer and seller negotiate an agreement
- giving the buyer and seller property statistics and information, including comparative information from listing services and local databases
- providing and preparing agreements of purchase and sale, and other relevant documents according to the buyer and seller’s instructions
A transaction facilitator has to treat both parties in an even-handed, objective, and impartial manner. They must remain neutral, not advocate for either you or the buyer, and they cannot provide confidential advice.
Before a real estate professional proceeds with transaction brokerage, both the buyer and the seller need to provide their informed consent by signing an Agreement to Represent both Buyer and Seller. Informed consent means each client understands the facts, implications, and future consequences of providing their consent. You do not have to consent to transaction brokerage. If you don’t consent to it, or the other party doesn’t, there are other options available to you such as seeking representation from a different real estate professional.
I just spent $50,000 to finish my basement with high-end finishings. Now, I’m listing my house for sale, and my real estate representative says she can’t include the basement square footage in the total size. Why not?
You developed your basement and it’s beautiful. You’re sure any potential buyer would agree that it looks great, and is definitely livable space. But, your real estate professional is correct, the square footage of your basement cannot be included in the size of your home for listing purposes.
In Alberta, real estate professionals are required to follow the Residential Measurement Standard (RMS) when listing a residential property for sale. The RMS contains nine principles that enable real estate professionals, as well as buyers and sellers, to determine and compare the size of residential properties. The RMS sets out the specific parts of a residential property that can be included in its size for listing purposes.
Above grade levels are the levels of a residence that are entirely above grade. Below grade levels are the floor levels of a residence that are partly or fully below grade. If any portion of a level is below grade, the entire level is considered below grade. Below grade spaces include lower levels and basements. The RMS size of a property is, essentially, the sum of its above grade levels. Below grade levels are not included in the RMS area.
Without the RMS in place, there would be little consistency in how real estate professionals, and their sellers, measure and describe their property. Some may want to include their basement (unfinished or not), some may include an enclosed sunroom, while others may include the space created by a bow or bay window.
The RMS provides a consistent means of measuring, and describing, residential property size in Alberta.
Sellers, and their real estate representatives, are welcome to include additional measurement information in their listings, but the primary size listed in the listing must be the size according to the RMS.
Sellers need to remember that size isn’t the only factor that will affect a property’s list or selling price. Other factors include location, condition, quality of finishing, layout, and even type of ownership. You may not be able to include the square footage of your basement in the total square footage of your home, but the features of your home will set it apart from other properties. Size matters, but it’s not the only thing that matters.
I’ve been working with an agent, but she’s going on holidays for 2 weeks. She’s going to arrange for someone else at her brokerage to take care of my listing while she’s gone. Do I have to sign a new contract with this person?
The short answer is no, but you may have to make changes to your existing contract depending on what type of brokerage you’re working with: common law or designated agency.
In a common law brokerage, your service agreement (contract) is with the brokerage, which means that essentially, you’re agreeing to work with any or all licensees at the brokerage. Because the agreement you signed is with the brokerage, any licensee from that brokerage can work with you under your existing agreement. The individual or individuals you have been working with are working with you on behalf of the brokerage.
In a designated agency brokerage, your service agreement is still with the brokerage, but only the individual (or individuals) named on the agreement are designated to work with you on behalf of the brokerage. If this is the case, and the individual your real estate agent wants you to work with for a couple of weeks isn’t specifically named on the agreement, the brokerage will have to designate, in writing, the other individual to work with you. You and the brokerage can amend your original agreement to include this new person as another designated agent for you.
Another option that is available when you’re working with a designated agency brokerage is that at the outset of your agreement, the brokerage designates more than one individual to work with you on behalf of the brokerage. This is completely acceptable, and will save you from having to amend the original agreement in the event the primary individual you’re working with becomes unavailable during the term of your agreement. When you’re signing your agreement, talk to your agent about their availability, vacation plans, and whether there are other agents within the brokerage that they sometimes partner with.
More than fifty percent of real estate professionals in Alberta are registered with a designated agency brokerage. Your agent should have explained whether their brokerage operates under common law or designated agency when you first started working together, and should have explained the differences.
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I saw on the news that fraudsters are being charged with unlicensed real estate trading. Why do you need a licence to buy or sell property?
First things first. You don’t need a licence to buy or sell property; consumers are always free to buy or sell their own property. When you need a licence, though, is when you’re helping someone else buy or sell property.
The individuals you’ve seen in the news are people who are not licensed as real estate professionals, who say they will help consumers buy and sell property, but instead, they are actually participating in various fraud schemes. That’s why they’re in the news.
Still, unlicensed trading in real estate remains a serious issue and not just because of the fraud that sometimes results. Under the Real Estate Act of Alberta, anyone trading in real estate, dealing in mortgages, performing real estate appraisals, or providing property management services requires a licence from the Real Estate Council of Alberta (RECA). It’s the law.
Buying a home is one of the largest financial commitments most people will ever make. Why would you want to trust that transaction with someone who doesn’t have education, experience, and a regulatory body behind them?
When you hire a licensed real estate professional, you can trust they’ve completed pre-licensing education, their background has been reviewed, they carry errors and omissions insurance, they’re required to complete ongoing education, and you can feel confident that a regulatory body will hold them accountable for their actions. All real estate licensees are required to carry errors and omissions insurance, and there’s a Consumer Protection Fund available in the very rare event a consumer suffers a financial loss as a result of fraud, breach of trust, or a failure to disburse or account for money held in trust by an industry member.
Think about it, you don’t want people driving on the road who don’t have a driver’s licence, right? If someone has a driver’s licence, it means they passed a competency test, and there’s an unwritten agreement that they’ll follow the rules of the road. If they don’t, they can be fined or even lose their licence. The same thing applies to licensed real estate professionals. If they violate the rules, RECA has the authority to discipline them, which can include licence suspension or cancellation.
When someone doesn’t have a real estate licence, and represents a consumer in a real estate deal, the consumer has no assurances that the person has knowledge or training, and there’s nowhere to go—other than court—if something goes wrong.
I want to hire a real estate agent and I’ve noticed some have designations after their name, such as Accredited Buyer Representative or Certified Condominium Specialist. Are these important?
Whether or not they are important is up to you. Usually, designations after a real estate agent’s name indicate additional education or experience in a particular area that resulted in a designation or certification from an industry body. If you are in the market for a condominium, maybe hiring someone who has a Certified Condominium Specialist designation will make you more comfortable. It’s entirely up to you.
Typically, to receive these types of designations, a real estate agent will have to complete additional education and/or attain a certain level of experience. For example, the National Association of REALTORS®, an industry trade association, offers an education program to attain an Accredited Buyer’s Representative (ABR) designation.
In addition to formal designations from industry trade associations, some real estate professionals may also claim particular expertise or experience. That expertise or experience may relate to a geographical area (for example, they’ll call themselves “Downtown Neighbourhood Specialist”), or in a type of property (for example, “Your Farm and Ranch Specialist”).
When making these claims, a real estate agent needs to ensure they can demonstrate the qualification or experience they are claiming. If an industry professional advertises particular qualifications or expertise, the Courts and RECA will typically hold them to a higher standard. That means if a real estate agent has never assisted a buyer or seller with a condominium, they shouldn’t call themselves a condominium specialist. But, if they do, and RECA receives a complaint about their conduct when assisting a condominium buyer or seller, RECA will hold them to a higher standard than someone who does not call themselves an “expert” or “specialist.”
At the end of the day, what you think is important when hiring a real estate agent is up to you. If a real estate agent you’re talking to has an additional industry designation, ask them about it. Find out what it took to attain it, and how they keep their designation current. If you’re seeking a specific type of property or have a desire to stay in a specific area, you may want to seek out a real estate agent who indicates—and can prove—extensive experience and expertise in that area. In all cases, though, ask questions to figure out what is important to you, and who you’re comfortable working with.