What Is Dual Agency?
3 min read.
As the Toronto commercial real estate market becomes increasingly complex, both buyers and sellers seek ways to simplify their property search process. One method gaining attention is the practice of reaching out to the listing agent directly, giving rise to the concept of dual agency. But what exactly is dual agency?
Dual agency, also known as multiple representation, is a term to describe a situation where one agent or one brokerage represents both the buyer and seller in a real estate transaction. It also occurred when two parties use the same brokage firm but different agent.
In Ontario, dual agency is recognized under the name of multiple representation and is governed by the Province's Real Estate Business Brokers Act (REBBA). Before engaging in dual agency, Canadian real estate agents or brokerages must adhere to specific conditions outlined in REBBA, including:
Describe the services typically available to purchasers and sellers.
Outline the services to be offered, along with any alternatives available to the prospective client or customer.
Inform potential buyers and sellers about the possibility of multiple representation, including a description of the services the firm would provide in a multi-representation scenario.
Clearly convey to potential buyers and sellers that the brokerage cannot represent multiple clients in a transaction unless all parties involved provide written consent.
When considering dual agency, it is vital to thoroughly evaluate the associated pros and cons.
Pros of Dual Agency
Streamlined Communication: One of the primary advantages of dual agency is the potential for streamlined communication. With a single agent overseeing the entire transaction, information can be conveyed more efficiently between the buyer and seller. This streamlined process may lead to quicker decision-making and a smoother overall experience.
In-Depth Market Knowledge: Dual agents often possess in-depth knowledge of the local real estate market. This comprehensive understanding allows them to provide valuable insights to both parties, aiding investors in making well-informed decisions based on current market conditions.
Negotiation Expertise: With a clear understanding of both the buyer's and seller's motivations, they can navigate negotiations more effectively. This can lead to mutually beneficial agreements and potentially favorable terms for investors.
Cons of Dual Agency
Conflict of Interest: The most concerned drawback of dual agency is the potential conflict of interest. Advocates for separate representation argue that dual agents can’t fully prioritize the best interests of both the buyer and the seller simultaneously, potentially leading to compromises that may not be in the investor's favor.
Limited Advocacy for Investors: Dual agents may struggle to provide the same level of advocacy for investors as a dedicated buyer's agent. When conflicts arise, investors might find themselves with less robust representation, impacting their ability to secure the most favourable terms.
Lack of Full Disclosure: Agency can create challenges in terms of full disclosure. Investors may not receive transparent information about the property, potentially leaving them at a disadvantage when making critical investment decisions.
Maintaining open communication with clients about the concept of dual agency is essential for establishing trust and transparency in commercial real estate transactions. If clients opt not to provide consent for multiple representation, the brokerage is obligated to offer them the freedom to select alternative representation with another reputable firm or agency, ensuring their preferences and interests are prioritized throughout the process. This commitment to client choice underscores the industry's dedication to ethical and client-focused practices within the dynamic landscape of the commercial real estate market.
References
Cooper, A. (2018, April 3). What Is Dual Agency and Why Does It Matter?. Zolo. https://www.zolo.ca/blog/what-is-dual-agency
About Royal LePage Commercial Westhaven Toronto
Our commercial real estate industry and segment expertise coupled with Royal LePage’s national platform and integrated systems provides best-in-class real estate strategies and a competitive advantage that can’t be beat.
We help businesses identify opportunities and maximize their return on investment with actionable goals, centralized support services and a strong commitment to customer success. Our national partnerships help us establish, guide and execute successful business investments.
We offer commercial real estate agents a professional environment, focused 100% on commercial real estate. Agents can expect unlimited market boundaries to build their business without the interference of a heavy corporate structure. In addition, agents will be able to access Royal LePage’s national referral network of over 18,000 agents to develop more business in their target markets with incoming leads generated daily. The brokerage provides agents a suite of services including marketing, promotional, networking and professional development needs.
Innovation and service excellence have developed and propelled the Royal LePage brand since 1913. When you join Royal LePage Commercial Toronto brokerage, you have the backing of one of the most powerful commercial real estate services company in Canada—Bridgemarq Real Estate Services Inc. (formally Brookfield Real Estate Services Inc.). Bridgemarq is a leading provider of services to real estate brokers and agents. They are an affiliate of Brookfield Business Partners, a business services and industrials company focused on owning and operating high-quality businesses and is listed on the New York and Toronto stock exchanges.