Conflicts of Interest

In rare situations, you may run into a conflict of interest. It arises when there is a real or apparent incompatibility between a real estate professional’s interests and your interests. Some examples of common conflicts that may arise in a real estate transaction:

  • if you find a home to buy and the seller is related to your real estate professional. This is a conflict of interest because your real estate professional is supposed to put your needs above all else and if they’re related to the seller, it could be difficult for them to do so
  • you want to buy a property that your real estate professional owns. This is a conflict of interest because your real estate professional is supposed to represent your best interests, and they won’t be able to fulfill that fiduciary duty if it’s their property you want to buy
  • you find a property you want to buy, but your real estate professional also represents another buyer who wants to buy the same property. This is a conflict of interest because your real estate professional has the same responsibility to both buyer clients; to put their needs above all else. Your real estate professional cannot act in the best interests of both of their buyer clients.
  • you find a property you want to buy, but your real estate professional also represents the seller. This is a conflict of interest because your real estate professional has the same responsibility of undivided loyalty to both you and the seller, and cannot act in the best interests of both you and their seller client.

Real estate professionals have an obligation to avoid, and disclose any conflicts of interest to you as soon as they arise.

That disclosure requires them to:

  • give you all the details they know about the conflict
  • explain why they believe they are in a conflict or potential conflict of interest
  • describe how the conflict affects you
  • advise you to obtain independent advice

Transaction brokerage is a way to deal with the one specific type of conflict of interest that arises when your real estate professional also represents the seller of a home you want to buy. It allows your real estate professional to work with both you and the seller client in the same transaction.

In transaction brokerage, your real estate professional becomes a transaction facilitator, and treats you and the seller in an even-handed, objective, and impartial manner. The real estate professional no longer owes you or the seller undivided loyalty.

If you and the seller agree to proceed in transaction brokerage, you will both have to sign an Agreement to Represent Both Buyer and Seller form, which ends the sole agency representation for you and the seller, and it sets out the terms of the new relationship between your real estate professional, you, and the seller. If you or the seller don’t agree to transaction brokerage, your real estate professional will present you with other options.

Once you are aware of any conflict of interest, it’s up to you how you want to proceed. You may want to get legal advice or you may want to proceed with a different real estate professional.

Your real estate professional cannot provide services to you if they are in a conflict of interest unless you give them your written informed consent.