Okay, I don’t know what the photo below has to do with multiple representation, but it came up on Google Images when I searched, and I think if anybody hasn’t seen that S.N.L. sketch with JT & Beyonce, they’re missing out!

Multiple Representation in real estate has always been a contentious topic, so today I’d like to analyze the potential conflict of interest that exists in representing both buyer and seller to a transaction…

Imagine being on trial in a court of law and retaining the services of an Osgoode-Hall-educated lawyer to speak in your defence.  Your freedom and identity is on the line, and this one man or woman is the only hope you’ve got.  Your fate rests in the ability of your defence lawyer.

Now imagine that this person is also acting as the crown attorney arguing against your cause.

Does that seem like a conflict of interest?

Perhaps this wasn’t the best lead-in for me to argue the point, “There’s nothing wrong with multiple representation in real estate,” but I always like to start at the top and work down.

Here is a quote directly from the Real Estate & Business Brokers Act:

“A registrant shall not represent more than one client in respect of the same trade in real estate unless all of the clients represented by the registrant in respect of that trade consent in writing.”

I find the wording of this statement somewhat confusing.  They start by saying “…not represent,” giving us the early impression that the consensus will that multiple representation should be avoided, but really all that is necessary to do so is simple consent.

“Sign here please, Mr. Buyer.”

“Sign here please, Mr. Seller.”

And that’s it!

Let’s rewind here for a moment since I have yet to actually explain what multiple representation is.

Buyer representation is when a Realtor acts on behalf of the buyer as his/her agent, protecting and promoting his/her interests.

Seller representation is when a Realtor acts on behalf of the seller as his/her agent, protecting and promoting his/her interests.

Multiple representation is when a Realtor acts on behalf of both buyer and seller.

However, it gets more complicated than that.

Multiple representation could also occur when a Realtor is representing two buyers to the same transaction.  If there were seven offers on a property, and David Fleming of Bosley Real Estate had two buyers that were both making offers, then he would need to get both buyers to consent to multiple representation.

Multiple representation could also occur when two Realtors in the same company are part of the same transaction.  If Joe Smith of Bosley Real Estate has a listing and David Fleming has a buyer for that property, then the buyer and seller to the transaction are both being represented by Bosley Real Estate, and thus both buyer and seller must consent to multiple representation.

So where does the most obvious conflict of interest come into play?

Let’s say that Mr. Seller retains my services to sell his house on Bessborough Drive for $799,000.  I’ve also been working with my client, Ms. Buyer, for about six months in attempts to find her a suitable property in this neighborhood.  I bring out my listing on Bessborough Drive, and Ms. Buyer is very interested.  In fact, she wants to make an offer!

How do I represent BOTH Mr. Seller and Ms. Buyer in this transaction?

I have fiduciary duties to BOTH Mr. Seller and Ms. Buyer.

If Ms. Buyer wants to offer $750,000 on the property, how can I advise Mr. Seller what to do, and still be impartial?

In my personal opinion: I can’t.

I’m certainly not going to score any points with the Ontario Real Estate Association on this one, but I just don’t think there’s any way that this can be done fairly.

I think that to not distinguish between two agents in the same company representing buyer & seller, versus the same agent representing buyer & seller, is a huge mistake.

Those are very different scenarios, but Multiple Representation lumps them both together.

I won’t shock anybody here by making this statement: every brokerage deals with multiple representation in their own way.

There is a reason I work for Bosley Real Estate.  The company is eighty years old, has been handed down through four generations of the same family, and various members of the family and the management team have held every single position there is to hold within CREA, OREA, and TREB.

Suffice it to say that we handle multiple representation the way it should be handled.

Last year, I was involved in a multiple offer scenario for a house in North Toronto.  The listing agent had his own offer on the property, and I had an offer along with six other agents.  The President of our company came in and sat down with the sellers, and went through all eight offers, one at a time.  The listing agent placed his offer in a sealed envelope at 9AM that morning, and handed it over to our President.

There was no funny business, and the highest offer took the property.

But I have no doubt in my mind that “funny business” goes on at XYZ Real Estate every day of the week.  What is to stop an agent from reviewing offers himself?  What is to stop him from telling a colleague what the highest offer is, or to read every offer and then re-submit an offer for his buyer clients that trumps them all?

In a word: nothing.

Now keep in mind that in this scenario above, his seller-clients would end up with more money for their property, so they would be happy.

But as we learned this week with Alex Rodriguez, cheating is only cheating if you get caught.

Here is another example: What would I do if I had two buyer clients interested in the same property?

I currently represent two young ladies who are looking for properties in Queen West Village.  I’ve shown them the same properties.  What if they were both interested in the same condo?  Would I push one of them to offer, and not the other?  If I pushed them both to offer, would I tell one girl what the other girl was offering?

That scenario will probably never happen, but if it did, how would I handle it?

I think the biggest conflict of interest with multiple representation occurs when a Realtor represents both buyer and seller in the same transaction, as we discussed above.  I think this is the only form or scenario which we could really stand to alter.

Perhaps the Realtor could pass off or “refer” the buyer to a colleague, thus giving the buyer another qualified professional to negotiate his or her best interests.  Although, the cynics would argue that since the original Realtor would be paid a referral by the colleague, the conflict of interest still exists.

No matter how you slice it, there will always be criticism of the way multiple representation is handled in real estate.  The public would like to believe that everything is being done by the book, but you’d be naive to think that any industry is without its corner-cutters.

I guess in the end, the onus falls on the buyers and sellers to “ask the right questions.”  Hopefully a Realtor would disclose everything up front, but “hope” is a four-letter-word, just like many others we know…