Written Service Agreements - Top 10 Frequently Asked Questions
By now you may have heard that as of July 1, 2014, if you’re buying a residential property in Alberta – and you’re the client of a licensed real estate professional – that licensed real estate professional is going to ask you to sign a written service agreement (a Buyer Representation Agreement).
The Real Estate Council of Alberta introduced mandatory written service agreements to enhance consumer protection, by providing greater clarity of the roles and obligations between real estate professionals and their clients, and to reduce any potential for conflicts and confusion.
1. How do I learn about options for a working relationship with a real estate professional?
The real estate professional will explain the options available, and give you a Consumer Relationships Guide that outlines the options, the difference between being a customer or a client, and the responsibilities of the real estate professional in each option.
2. Are Buyer Representation Agreements mandatory?
Yes. As of July 1, 2014, the Real Estate Council of Alberta requires residential real estate professionals to use written service agreements when working with a client. Real estate professionals will ask buyer and seller clients to sign a written service agreement.
3. What is the purpose of written service agreements?
Written service agreements inform clients about what they can and should expect from their relationship with their authorized industry professional. They:
- describe the responsibilities and services of the real estate professional
- outline the obligations of the real estate professional and the client
- set out the fees (if any) or how the industry professional will be compensated
- provide consent to collect, maintain, use, and distribute a client’s personal information
- address any potential conflict of interest scenarios
4. Can I buy real estate without entering into a written service agreement?
Yes, as long as the brokerage is not treating you as a client. A brokerage may facilitate your purchase of real estate without entering into a written service agreement. In these cases, the brokerage would treat you, as the buyer, as a customer. This is typical when a buyer is purchasing a new home or condominium, and the brokerage represents the builder.
5. What services may a real estate professional provide if I am a customer?
If you are a customer, a real estate professional may:
- Show you properties
- Provide real estate statistics and information
- Provide standard form agreements and help you complete them
- Provide the names of other service providers (appraisers, mortgage brokers, etc.)
If you are a customer, a real estate professional may not:
- Provide any services that requirement discretion of judgment
- Give confidential advice
- Advocate on your behalf
6. Are all buyer representation agreements exclusive?
No. The brokerage and buyer must agree to the terms of the agreement. Buyers should make an informed choice about the type of relationship they wish to have with a real estate professional. They should also understand the implications of the options available to them.
7. What is the difference between an exclusive and a non-exclusive buyer representation agreement?
In an exclusive buyer representation agreement, the buyer agrees to only use the services of that brokerage to represent and assist them in purchasing a property.
In a non-exclusive buyer representation agreement, the buyer may use the services of multiple brokerages at the same time. Buyers can enter into multiple non-exclusive buyer representation agreements.
8. Do I need to sign anything if I want to see a couple of houses?
It will depend what information you provide to the real estate professional before viewing homes. If or when you start providing confidential information, such as needs, motivation or financial qualification, to the professional, he or she needs to clarify your working relationship – to find out if you want to be treated as a client or a customer. If you want to be a client, and have that professional represent you, you will need a written buyer representation agreement. The requirement for a written service agreement won’t be triggered simply by visiting an open house, small talk about housing price ranges or property styles, or when a real state professional simply responds to general, factual questions from a buyer or a seller.
9. What is the duration of a written service agreement?
The duration of such an agreement is negotiable between you and the brokerage; it could be a day or many months, depending on the specific circumstances.
10. If I sign a buyer representation agreement, do I have to pay my real estate professional?
In most real estate transactions, the seller or the transaction pays the real estate fees. There are situations where the seller will not pay the buyer brokerage portion of the fees and your brokerage may ask you to pay in that situation. Your industry professional should discuss this issue with you and alert you if you wish to view one of these properties. Often, the net result of what you pay for the property is not affected by who pays the buyer brokerage portion of the fees.
The Real Estate Council of Alberta is the independent governing authority that sets, regulates and enforces standards for real estate, mortgage brokerage, property management and real estate appraisal professionals in Alberta. For more information about written service agreements, the Real Estate Council of Alberta or Alberta’s real estate industry, please contact a licensed real estate professional or visit www.reca.ca.