Understanding the TRESA changes and multiple representations is not easy, but understanding the different relationships between buyers, sellers, and agents is crucial when trading in real estate. This article breaks down the new TRESA rules regarding these relationships and the rules that govern them, focusing on two main parts: client representation and multiple representation (MR).

1. Relationships Without Customer Service

No More Customer Relationships

In real estate, the term “customer” has been replaced by “self-represented party.” A buyer or seller can no longer be considered a customer, and customer service is now prohibited. Instead, buyers and sellers must either be a client or a self-represented party.

Client vs. Self-Represented Party

1. Client: A buyer or seller who has entered into a representation agreement with a brokerage is considered a client. As a client, they receive both services and representation from the brokerage and its agents.
2. Self-Represented Party: This is a person involved in a real estate transaction who is not a client. They do not receive any services, advice, or representation from the brokerage. They are part of the transaction but handle it on their own, without professional guidance.

General Tips When Dealing with Self-Represented Parties

– Real estate agents should be cautious when dealing with self-represented parties. Agents cannot provide advice or services to them.
– Agents can offer information, such as details about a listing or the market, but they should not provide any opinions or guidance on the transaction.
– Any assistance given to a self-represented party must benefit the agent’s client without overstepping boundaries.

Providing Information vs. Advice

Agents can share general information at any time, like details about an open house or market trends. However, when it comes to providing advice or transaction-related information, agents need to be careful not to cross into giving unauthorized guidance.

 

2. Representation Models in Real Estate (Multiple Representation)

There are two main types of representation when it comes to real estate transactions: brokerage representation and designated representation.

  • Brokerage Representation
    – In this model, the entire brokerage and all its agents represent the client collectively. This means all agents within the brokerage may have access to confidential information about the client.
    – MR often occurs under this model when a brokerage represents both the seller and one or more buyers in the same trade or more than one buyer competing for the same property.

 

  • Designated Representation
    – In this case, only a select number of agents are assigned to represent a specific client. The other agents within the brokerage must treat the client impartially, meaning they cannot share any confidential information.
    – This model is more controlled, as only designated representatives are involved in the transaction, and other agents do not have access to the client’s details.

 

  • Multiple Representation: A Conflict of Interest
    Under brokerage representation: MR happens when the brokerage represents both the buyer and the seller or multiple buyers for the same property. Even if different agents represent the clients, the brokerage must remain impartial.
    Under designated representation: MR only occurs if the same agent represents both the buyer and seller, or multiple buyers in the same trade. This is rare but can happen.

For a visual explanation, click here to see a video covering Multiple Representation and other topics from the Course 2 Humber Real Estate exams.

Example Scenario of Multiple Representation (MR)

Let’s say John represents a seller under designated representation, while Mary, another agent from the same brokerage, represents a buyer under brokerage representation. If Mary’s buyer is interested in the property John’s seller is selling, this creates a situation of MR. In this case, both John and Mary must treat their clients impartially, which can limit the guidance they can offer. This situation could have been avoided if the brokerage only used designated representation, where only a few agents handle each side.

Disclosure and Consent for Multiple Representation

Whenever MR arises, it is mandatory for the agents to provide written disclosure and get written consent from their clients as soon as possible. Failing to disclose early, especially at the offer stage, is considered too late and can cause complications. Importantly, MR does not always serve the client’s best interests, as agents must remain neutral and cannot give personalized advice.

Conclusion

Understanding these different representation models is essential for both clients and agents in real estate. Whether working with a brokerage under a collective or designated model, being aware of potential conflicts in multiple representations can help both buyers and sellers make informed decisions. Proper disclosure, transparency, and ensuring the client’s best interests are at the forefront are key aspects of these relationships.

Looking to pass your exam in 5 days? –> Click here to see my exact strategy.

If you’re looking for more info on Multiple Representation, check out this article by RECO: RECO Bulletin No. 3.2 Multiple representation.

Published On: October 23rd, 2024 / Categories: Uncategorized /

Featured Posts

Resources (FREE – Click to Download)

Thanks for visiting my site! The Pass Playbook is a section for all students looking to get their real estate licenses easy and hassle-free.

You can download any of the free resources above, subscribe to get exclusive practice questions, and apply to join some of our monthly group sessions.


Subscribe To Receive The Latest Tips

Be the first to receive free quizzes, notes, checklists, and more.

Unsubscribe anytime.