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As a buyer or seller, what should I know before agreeing to multiple representation?

Multiple representation occurs when two parties are represented by the same brokerage. This could happen with each party having a different representative of the same brokerage, or a single representative could work with two or more parties.

Typically, multiple representation involves the buyer and seller of a property, but it can also happen with two or more buyers who are interested in the same property. It is sometimes referred to as “dual agency.”

Here’s the basics of what you need to know about it.

Brokerages and individual sales representatives must follow a specific set of disclosure requirements when entering into a multiple representation scenario.

First, before you enter into any representation agreement with a brokerage, even if you’re not yet in a multiple representation scenario, they must tell you it may arise and that your consent in writing is required for it to happen. They must provide you with this disclosure in writing.

Then, if the scenario arises, they have to inform you that they intend to represent the other client as well.

In addition, they must disclose how their obligations to promote and protect their client’s best interests will differ compared to if they only represented you, and not the other party. This is called a fiduciary duty. These disclosures are to be made as soon as they can practically do so, and it must be before an offer to purchase is made.

Multiple representation cannot proceed unless both parties give written consent to their selected brokerage. If one party does not give written consent, the brokerage must release one of their clients, who would need to find other representation. One major upside to multiple representation is potential for a reduced commission rate compared to what you would pay for two separate brokerages, but of course there is no guarantee or requirement that this will happen.

However, the process of multiple representation does raise its own unique set of things to consider. Here are a few:

• Buyers and sellers may find their interests and needs still clash in some way with one another. In a multiple representation situation, sellers are trying to get the most for their home, while the buyer is looking to pay the least possible. The buyer and seller have to think hard about how the negotiations might play out and their interests be best protected.
• Multiple representation presents particular challenges for buyers who may rely heavily on the guidance of their representative, especially when sharing confidential information that they may not want to be shared with the other party to the trade.

These cons can be partially offset by setting limits for how much information can be shared with the other party. That’s something that all buyers and sellers in multiple representation have a right to do. But while personal information about a party typically remains confidential unless that party clearly consents otherwise, the representative will be required to disclose to all parties factual information about the property and the market in order to meet their fiduciary duties to all clients.

When you’re considering multiple representation, carefully consider your needs and expectations. If you are uncomfortable with the arrangement, remember that it’s your choice. Ontarians have thousands of registered brokerages to choose from, so you’ll have lots of options if you need to find alternative representation.

There’s an additional factor that I didn’t get into here: multiple representation when you’re a customer of a brokerage, instead of a client. This doesn’t apply to the vast majority of buyers and sellers, who work with a brokerage as their client. A sales representative doesn’t have the same fiduciary duty to a customer as they do to a client. For example, they might only give you information and not advice. This could put you at a disadvantage if the other party is a client. To learn more about being a customer, check out this previous Ask Joe column.

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