What Makes the A-Team Different?
Buying or selling a home is a two-step process. All too often, however, the first step is overlooked because the second one is SOOOO EXCITING.
If you really want to knock step two out of the park, then the key is taking care of step 1 first.
The steps are:
- Representation: Hiring your REALTOR® & deciding on the relationship
- Working as a team to sell or buy
In today’s post, we’re going to focus in great detail on the relationship.
We’ve been doing this for a while now, and we know that the strength of the relationship you have with your agent will be a main determinant of how successful you’ll be in step 2.
Why I Love The Real Estate Industry
It’s a geeky confession, but I LOVE this industry and here’s why:
Every day I get the chance to build a life-long trusting relationship with a new client and guide them through a complex process. I get to be there for them. In a perfect world, I wouldn’t be there; they’d have a family member with the necessary skills and licence, but most people don’t. So it’s my job to establish (through total honesty) a deep level of trust so that we can go out and achieve amazing results together.
The heart of this is the fiduciary duties. These are duties that agents in a sole agency relationship owe to their clients at all times. They are what make the real estate industry special. They establish the legal foundation for the powerful relationships that I get to form. Without them, I wouldn’t have such meaning in my job:
- Undivided Loyalty
- Full Disclosure
- Reasonable Care & Skill
- Full Accounting
Check out the Consumer Relationships Guide from our regulator, the Real Estate Council of Alberta (RECA), to learn about each of these amazing duties:
The guide is designed to lay out the representation choices to you, the consumer. Not all real estate transactions involve a brokerage, but if they do, there are three possible types of representation relationships:
a) Sole Agency
b) Representing Both Parties with Limited Duties
c) Customer Status
d) One of the clients can be referred to a different agent or brokerage
a) Sole Agency
This is the strongest form of representation. It is very powerful because, as your agents, we must look after only your best interests. In fact, all of the fiduciary duties apply. We make this available to all clients unless a conflict of interest exists.
A classic example of a conflict of interest in when a common law brokerage or associate at any type of brokerage represents a buyer and seller who wish to transact the same property.
The problem (or “conflict”) in this situation is that, by definition, the agent cannot represent both parties with “undivided loyalty”. So the option of sole agency is removed unless either the buyer or seller is referred to another brokerage or agent.
b) (Kind of) Solution #1: Representing Both Parties
In the past, the practice of “double-ending” was extremely common (it is still commonplace). This is a workaround whereby the common law brokerage or agent still promise confidentiality, but advise both parties that they cannot look after their best interests. The fiduciary duties and resulting agency relationship are limited.
The agents and both clients must actively choose to enter into this type of relationship. For customer service reasons, we would almost certainly never say no to it, however, we do like to point out the downsides of this form or representation (there are a few benefits, too). It can leave inexperienced buyers/sellers vulnerable to the other party in the transaction, and we find that the general level of trust falls rapidly in this high-pressure environment. In the past, this led to the majority of the (handful of) customer service issues we had.
c) (Kind of) Solution #2: Customer Status
One client can choose to be represented only as a “customer” (no fiduciary duties apply). Essentially, they are not being represented in the traditional sense, though there is a paper connection to the brokerage and the agent must act honestly. This tends to set one party at a disadvantage.
d) (Kind of) Solution #3: Referring Away
One of the clients can be referred to another agent for sole agency representation. This is nice because both clients will receive advice in their best interests, including price advice. However, for all of the incredibly talented agents we have at RE/MAX® Fort McMurray (with worlds of experience), we all offer different systems and service, so clients can have mismatched expectations upon handover.
RE/MAX® Fort McMurray is Really Cool
Okay, so we LOVE the team and leadership at our brokerage. Here’s just one reason why…
Our brokerage was an early adopter of a really cool thing called “designated agency”. Until 2014, when two agents had clients in the same brokerage who wanted to trade a property between them, a conflict was deemed to exist (as above). Typically, both clients retained their agents and selected solution #1. For example, neither agent was allowed to advise their client what price to offer, or counter-offer.
It was a shame because a lot of strong, trusting relationships between agents and their clients were unnecessarily weakened. If I, Tom Albrecht, had a buyer client interested in the listing of Agent B in the same brokerage, and neither I nor that agent knew any of the confidential information of the other agent’s client, then why should we not legally be permitted to give our respective clients that really important advice?
So in 2014, a new legal form of real estate brokerage was authorized by the Real Estate Act, and as a forward-thinking organization, RE/MAX® Fort McMurray was one of the first to jump on it.
In this new form of brokerage, each of our agents has the responsibility of keeping their clients’ information confidential at the client level (not brokerage level). They are then afforded the right to retain a sole agency relationship with their client regardless of whether Agent B happens to be working for the same brokerage or not. This new legal form of brokerage much more accurately reflects the reality on the ground; it’s really not hard to keep your client’s information confidential from other agents in the brokerage or team.
This change has reduced the frequency of conflicts of interests at our brokerage. Considerably.
The A-Team’s Solution
Even as a team, each of our agents is a designated agent; each agent retains the confidential information of their clients and gets to look after only their best interests in almost all circumstances. Breanna and myself are a little different because we are married, so there can be conflicts, but more on that later.
We’re also specialists, so we basically never have agents representing a buyer and a seller client on the same transaction. This reduces the regularity of conflicts significantly.
Further, our team has vast quantities of training, operating policies and systems in place so that we all perform our roles in extremely similar ways. This means that, in the worst case if a conflict of interest arises, we simply offer to refer our client to another world-class specialist on the team! Here’s an example:
Let’s say I have a buyer client who wishes to place an offer on one of Breanna’s listings. Breanna and I are treated as the same agent for most listings, so a conflict exists. It’s not practical to transfer the listing, so the buyer client is offered to work with another A-Team buyer’s agent. This is rare, but it happens. The trick is to inform the client of this possibility at the buyer consultation and reassure them that their confidential information will remain confidential forever (that’s the law). The talented buyer’s agent then advises the buyer client (even on price), and Breanna defends the seller client the way she knows how.
Conclusion: Why This Matters
This matters because our job as REALTORS® is to protect you as much as possible, and give you important advice you can rely on, especially when you enter the transaction stage.
This stuff might seem a bit intangible, but it’s crucial because it’s the tangle of laws, philosophies and systems that underpin our team. It’s what makes of clients’ experiences different, better…
We offer a world-class team of specialists who work for an innovative brokerage called RE/MAX® Fort McMurray. The architecture means that we are able to promise our clients the ability to be in the strongest form of agency relationship (sole agency), basically in all situations.
No more double-ending, no more losing fiduciary duties and no more rushed/unfamiliar relationships. No more customer service issues and client stress.
Just deep, protected, trusting relationships that lead to success in step 2: Buying or selling a home with gusto! If you’re ready to buy or sell, and you want to leverage the power of a relationship like this, please say “Hi”!
Thanks for reading my blog. 🙂
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