You sign a listing agreement with me. Who do I work for?
Wait, that’s a trick question, since you don’t sign a listing agreement with me, but rather with my brokerage. The listing is signed at the brokerage level, not the agent level.
Alright, so you sign a listing with me and my brokerage, who do I work for?
That’s a silly question, right? It’s hard to believe that this is even leading somewhere worthy of a discussion?
Yes and no.
Yes, because I obviously work for you, the seller.
No, because the general public doesn’t seem to understand this concept, and as the heat turns up on real estate agents in Toronto in 2021, the public has to realize that they simply can’t have it both ways.
By “have it both ways,” I’m referring to a double standard that is quite common. Think about it: you hate the way that real estate is sold in Toronto, with the under-listing, and the multiple offers, except when it comes to your time to sell, you love it. You can’t believe it. All the showings, all the interest, all the offers – and the sale price! Yay!
Out there right now, there are a lot of folks on the buy/lease side that don’t understand, or don’t want to accept, how agency representation and fiduciary duties work. Those that don’t want to accept are guilty of that double standard, since their refusal to accept stems from self-interest, because it would be impossible for them to feel the same way if the shoe was on the other foot.
I think a brief history lesson might help.
If you were looking to buy a house in Toronto in 1965, you would walk into a real estate office and ask them, “What properties do you have listed for sale?”
There was no House Sigma, let alone MLS, let alone internet, let alone, let alone…
The reason that real estate brokerages started posting listings on the window of the brokerage storefront was because so many people came inside to inquire. Why not just post the listings on the glass so people could look at them from outside?
In a small town, or on a main drag, you’d have ABC Realty, XYZ Real Estate, and 123 Realty Brokerage all flyering their front windows with real estate listings, so you could just walk up and down the main drag browsing listings.
If you happened to be interested in one of those listings, what did you do?
You spoke to the listing agent.
You worked with the listing agent.
You bought through the listing agent.
And who had your best interests at heart?
My Dad tells me stories about buying a house in 1978 through the listing agent, who had sold another house to the seller, and that house had been bought by another client. They were all tied together, and if one person couldn’t close, then none of the deals closed. Back then, the seller might have to “take back” a mortgage just to get a deal closed, or risk a chain of events that could unravel several purchases and sales.
In 1965, or in my Dad’s day in 1978, or even later in the 1980’s, there were no “buyer agents” because there was no “buyer agency.”
Every single agent worked for the same person. Do you know who?
Under law, every agent worked for the seller, no matter what. Is that nuts or what?
Now, fast-forward to 2021, and do you know that if you’re not under a Buyer Representation Agreement, by law/definition, the agent you’re speaking to still works for the seller? Yeah, not in reality. But by definition, they do.
So let’s say you’re a buyer, working with an agent, or not working with an agent – doesn’t matter. And you call me about my listing, and ask something like “What do you expect this property is going to sell for?”
How would you expect me to answer that?
How would you like me to answer that?
In the past couple of years, I’ve become very direct, cold at times, and almost robotic in how I deal with calls like this. I do this not out of frustration of disinterest, but rather out of necessity.
“Are you currently working with an agent?” I ask them.
I don’t ask because, like you might assume, or like most other agents in this position, I’m interested in their business. I’m generally not interested in their business (more on that in a moment), but I have to ask them because it’s the right thing to do.
If they say that they are working with an agent, then I ask that agent to call me on their behalf. Why? Because I don’t like broken telephone and I don’t like speaking to other agents’ clients. It runs the risk of improprieties and implied representation.
If they say that they are not working with an agent, then I tell them the only thing they need to know: “I work for the seller. I can’t give you guidance on the value of this home.”
Except that many of you reading this feel like those folks that call me up. You feel like I’m being a jerk, or unhelpful, or unfair. But who do I work for? Who is my contract with? To whom do my fiduciary duties lay?
Time and time again, I am taken to task for simply doing my job.
Case in point: I have a luxury lease listing for $10,000 per month.
Last week, I received an email from somebody who said, “Can you tell me a little bit about the landlord?”
What do you think? Is this a fair question? Would you ask this? Maybe.
Except that this email is through Realtor.ca and I have no idea who I’m talking to.
So I email back and say, “I’m happy to speak about the property. Do you have time for a quick phone call tomorrow? Please let me know what time is convenient and at which number I can reach you.”
I think so.
Except some of you might think, “I don’t like talking on the phone. I text.”
That’s fine. But I’m representing my client here. I’m looking after his $4,000,000 property, and frankly, I don’t care how you prefer to communicate. The only thing that matters is the job I’m doing for my client.
This person wrote back and said, “I don’t have time for a phone call. I just need to know a little more about the seller to make a decision on this property. What line of work is he in? Does he have other properties? How old, what’s his background, etc. I want to know who I’d be renting from. Thanks.”
Not even close. And don’t try to convince me that it is.
If this person submitted an offer, accompanied by a rental application, employment letter, credit check, and I was able to look him or her up on LinkedIn, then I might consider divulging information about my client.
But to a person who says, “I don’t have time for a phone call,” and then demands information about my client, I simply write back and say, “I’m sorry you don’t have time for a phone call, please note my contact information below and feel free to call me at your convenience when you’re ready.”
I never heard back from that person, by the way. So tell me, “David, you just scared away a perfectly good renter for your client! You’re not doing your job!” Except, I’ll vehemently disagree. Fraud is rampant in the rental industry, and when a firstname.lastname@example.org emails me and asks for personal and background information on my client, I would be a fool to provide it.
Here’s another story…
A few months ago (and I may have written about this, but it’s been a long year…) I had a listing for a house that was literally sinking into the ground. Literally. Major structural problems existed, and we had no choice but to sell this house in as-is condition with no representations or warranties.
I probably received over forty cold calls on the house, and every buyer wanted to “work with the listing agent,” because they all think they’ll get a deal, or a break, or that there’s some sort of advantage.
I told every caller, “We’re not representing any buyers in this sale.”
They couldn’t believe it.
In this area, in this community, everybody wants to work with the listing agents because those listing agents all use their listings as lead farms! They all want to double-end their listings, and those calls to listing agents are typically very-well received!
I told every buyer, “This property appears to have structural damage. The property is being sold in as-is condition, with no representations or warranties. We cannot work with, or show through, any buyers. We do not want to create a scenario where implied warranties or implied representations are present.”
Those words fell on deaf ears.
I had people yelling at me, borderline threatening me.
“If you don’t show me this house and present an offer to me, I’ll report you!”
They demanded that I show them the property. They told me I had a responsibility! A duty!
In reality, no such duty exists.
I wasn’t refusing to show them the property because I’m lazy but rather because the seller is my client, not them! Here we have a house that could be a potential minefield for my sellers and it’s my job to lead them through the process of selling it, and closing it.
The last thing in the world I want to do is jeopardize the sale and closing of their property because I was answering questions to some random person that called or emailed me, and ended up making an offer through another agent. Because remember, I would not represent a buyer if I had the listing.
“Implied representation” can exist where the buyer is under the impression, whether factual and accurate or not, that you’re giving them some level of service and care. And “implied warranties” could exist if they asked you questions about the property and you answered.
One more example which will, once again, demonstrate why I have to make it clear who I represent, but also why I can’t acquiesce to every stranger that calls me on a listing.
A person emailed me about a listing and said he wanted to take a look.
I asked if he had an agent, and the person said, “Yes, I do.”
I then told him that he should have his agent show him the property.
Now, many of you reading this have been in this situation. You’re working with your cousin who lives in Ottawa because she’s going to cut you a break on the commission, so you ask the listing agent to show you houses. You believe that the listing agent has a duty to show you the house.
If you wanted to, you could argue that I have a fiduciary duty to my seller-client, and that duty includes ensuring anybody and everybody who is interested in the property is able to gain access, and thus if some buyer under contract with another agent wants to see the property at 2:00 AM, I have to show it to them.
But if you made that argument, you’re ignoring agency and representation, let alone, common sense.
This person told me, “My agent doesn’t work in Toronto. I would like you to show me the property.”
I wanted to respond that maybe he should consider working with an agent who actually lives in the city in which he’s selling properties, and question how an agent from Timmins, Belleville, or North Bay would be able to work in his best interests, but that’s not my job.
I said, “I can’t show you the property because you are under contract with another agent and I work for the seller.”
I further explained that I do not interfere with other agents’ client relationships and that I do not put myself in a position to make implied representations or warranties about the property.
He said, “You don’t have to say a word to me. You just unlock the door, I walk through on my own, and then I walk out and leave.”
But this merely presented another problem, you see, since I work for my seller! I can’t have a stranger walking through my seller’s home, unaccompanied, and unsupervised.
Is this person a robber? Probably not, but I’m not here to play the odds. When somebody I don’t know says, “I want to walk through your seller’s house, unaccompanied,” I’m not taking any chances. I’m not saying that this person was going to steal anything, or look at any personal, financial, or privileged information, but I’m just not in a position to allow that.
This person yelled at me too. He told me how awful I was, how I wasn’t doing my job, how he hated real estate agents, and then some.
I wished him good luck in his property search, but he hung up on me before I could finish.
So am I a bad guy?
After having read all the preceding, do you wish that I would simply throw away my contractual obligations, agency representations, fiduciary duties, standard of care, and common sense?
Because over the last few months, I’ve had a lot of phone calls and emails from both represented and unrepresented buyers and lessees who simply don’t care. They want what they want, when they want it, and there’s no convincing them otherwise.
What I like about the saying, “the shoe is on the other foot” is that you have two feet, a left and a right, and at some point in your life, the shoe will have been on both. For any would-be buyer or would-be tenant, they simply have to see things from the other side and understand that when it’s their turn to sell, or lease out their property, they won’t want their representative doing the same things that they’re demanding, today.