Mandate Agreement

Why Should I Sign a Mandate Agreement?

The advantages of a mandate agreement...

What happens if a purchaser will not sign a buyer agency agreement? Can an agent still represent the buyer? And do consumers benefit by signing that document?

The answers are as follows:

There is a critical distinction between buyers who are clients of an agent, and buyers who are simply customers: "Agents owe clients the highest level of fiduciary duties - competence, diligence, full disclosure, obedience, loyalty, confidentiality and complete accounting. Agents shall endeavour to protect and promote the best interests of a client". Being a customer ranks well below the status of a client. Agents are required to deal fairly, honestly and with integrity with customers, and not to mislead them about a property or a transaction. And when acting for customers, agents should exercise reasonable care and skill to ensure that answers given, or information provided, is complete and accurate. But generally speaking, the agent's responsibility to the customer stops here.

"Written representation agreements are mandatory if an agent is to represent a consumer as a client. If buyers won't sign agency agreements, they can only be treated as customers, not clients".

Buyers then lose the full arsenal of fiduciary duties available to clients. So when no buyer agency agreement is signed, "confidentiality" is out the window.

"Anything the buyer tells his or her agent can and must be divulged to the vendor (i.e. how much the buyer is prepared to pay for a property), as the agent is not working under a buyer agency agreement".

Nor should the unrepresented buyer expect undivided loyalty from his or her agent. Their status as a customer means that they fall under the auspices of sub-agency.

"Clearly, it is in a buyer's best interest to sign a representation agreement. It allows them to benefit as a client from the full set of fiduciary duties. However, what creates concern for consumers are the terms and conditions of that contract."

What should a buyer agency agreement contain?

The role and nature of services to be provided (and whether or not dual agency is allowed).

An obligation by the agent to make the buyer aware (and vice versa) of any properties meeting the buyer's criteria.

The term of the agreement (generally not to exceed six months).

The commission arrangement (including promises to rebate or reduce commission).

Any other expectations of the client or obligations of the agent.

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