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There are many different business models for Alberta real estate brokerages. Each offers a different package of services. Consumers should clearly understand the different business models available to them. Consumers must know what services are in the brokerage business model or just as important, what services are not in their business model. Real estate professionals must ensure their client and third parties clearly understand their roles.
Some examples of real estate services include:
• providing a current market assessment (CMA)
• installing a “For Sale” sign
• advertising the property for sale
• hold public open houses
• show properties to prospective buyers
• post information to a local real estate board MLS® System
• providing agency representation services
• use best efforts to market or locate a property
Real estate professionals create agreements explicitly or implicitly. They may be oral or written and may include agency representation as one of the services. Residential real estate client relationships must be in writing. When a real estate professional gives services to a consumer, that consumer is a client. The obligations to the client will depend on the relationship and the service(s) the brokerage offers.
A real estate professional has three options when establishing a relationship with a consumer:
• a customer relationship in which the real estate professional gives no service
• a client relationship in which the real estate professional gives limited service. “Mere Postings” fall into this category
• a client relationship in which the real estate professional’s services include agency representation
Real estate professionals may opt to give some administrative services to a customer without creating a client relationship. Real estate professionals will typically provide these services to a customer as it benefits their client and the transaction. When dealing with a customer, a real estate professional must be honest and must exercise reasonable care and skill in relation to any services.
Client relationship: mere postings
The Consent Order between CREA and the Commissioner of Competition (Consent Order) defines a “Mere Posting” as a listing on a Member Board’s MLS® System where the member has chosen or agreed not to provide services to the seller other than to submit the listing for posting on MLS®.
CREA states a listing brokerage must act as agent for the seller to post, amend, or remove a property listing on MLS® System. This allows for the “Mere Posting” of a property listing on MLS® System but removes the requirement for a continuous agency representation relationship for the full duration of the listing.
A REALTOR® who enters into an agreement with a seller of a property to facilitate a “Mere Posting” on the MLS® System enters into a service agreement as defined in the Real Estate Act Rules (Rules). This constitutes a client relationship because the seller engages the REALTOR® to list their property and submit it to the MLS® System.
RECA’s conclusion of the review of “Mere Posting” services is a person who provides a “Mere Posting” service in Alberta is trading in real estate. They require a real estate broker licence from RECA.
A self-represented “Mere Posting” seller is a client to a real estate professional that assists a “Mere Posting” seller. Real estate professionals must impart a clear understanding of their role and extent of services they offer. RECA recommends real estate professionals clearly articulate there is no agency representation on the “Mere Posting” service agreement without written amendment. Real estate professionals must avoid any activity that might create an implied agency representation relationship with the seller. They should not give confidential advice or any service that requires the use of judgment or discretion.
A self-represented “Mere Posting” seller is a customer to a real estate professional representing a Buyer. Real estate professionals who represent buyers must avoid any activity that might create an implied agency representation relationship with the seller. When buyer representatives deal with unrepresented sellers, whether on MLS® or otherwise, they should not provide confidential advice or any service that requires the use of judgment or discretion.
Real estate professionals are responsible for documenting the roles in any relationship. This documentation must match the relationship to which the parties have agreed. Of primary importance, a real estate professional’s conduct must always reflect the nature of the documented relationship.
Clients and customers must understand the role of the real estate professional. A clear understanding of the services and the implications of limiting services will help to establish realistic expectations for consumers and real estate professionals. A clear understanding of the nature of the relationship and brokerage services is the best dispute prevention strategy for consumers and real estate professionals.