When I attend open houses, why do I get asked if I’m working with an agent?

This is a common question that listing agents typically ask people who attend open houses, and there is good reason for this.

I would like to begin by saying that open houses are generally accessible to all members of the public, regardless of whether they are working with an agent or not. Of course, this depends on the wishes of the seller and when and how open houses will be conducted.

If you are looking to buy a home and thinking of working with an agent, you can expect to be asked to enter a client contract with the agent’s brokerage. This is commonly referred to as a buyer representation agreement, and it can have key implications for both the seller’s agent and you.

Make sure you review the contract carefully as it is legally binding once signed. The remuneration portion of the agreement sets out the total amount (commission) you are expected to pay, and the circumstances under which you would owe less than that or nothing at all if you buy a home while you are under contract with them.

Some sellers offer to pay commission for the buyer’s representative, which could cover part or all of the amount you would owe. The amount you owe your brokerage is something you agree on with the brokerage before you sign the contract.

Under the law that regulates the conduct of brokerages and agents, if a prospective buyer is working with an agent and has signed a representation agreement, any other agent must communicate with the buyer only through their agent. This is one reason why it’s important when attending an open house without your agent to disclose that you are represented by another brokerage.

If an agent tries to communicate directly with the client of another brokerage, they could be in violation of the law.

The good news is that this situation is completely avoidable. If you have an agent, you can expect that they will attend all private showings with you, even those out of town. If your agent is not available, you can expect they will make arrangements with another agent to show the property.

Even if your agent is not with you at the time of an open house, always share their name and contact information with the listing agent before engaging in discussions about the property.

Since a representation agreement is a legally binding contract, make sure you are comfortable with the terms outlined, and consult a lawyer who can provide advice regarding such agreements.

Unless it says otherwise, a representation agreement commits you to working exclusively with one brokerage for an agreed length of time, within a specific geographic area, and for a specific property type or address.

It also ensures the representing brokerage will be bound by their fiduciary duty to follow their client’s lawful instructions, protect their confidential information and promote their best interests in a transaction. In return, the buyer or seller – as a client – agrees to be loyal by negotiating any offers through their agent.

If you have a question for Joe about the home buying or selling process, please email information@reco.on.ca.

This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.

Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.

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