Can I Buy a Property Without a REALTOR® ?

November 8, 2023

Yes. Just like a Seller can represent themselves, so can a Buyer.

In Ontario, REALTORS® usually work with Buyers in one of 2 ways. The most common relationships are “client” and “customer”, but other options may be available in the marketplace. A Buyer’s Representation Agreement acknowledging a Client relationship is an “exclusive” agreement meaning both parties agree to work only with each other. A Buyer Customer Service Agreement acknowledging a Customer relationship is a “non-exclusive” agreement, meaning both parties agree to work with other people.

By having the Buyer sign a Customer Service Agreement, making them a Customer.

When you’re a Customer, the agent does NOT work solely in their best interest and provides restricted services. The REALTORS® obligations are:

    • Fairness, honesty and integrity to everybody
    • Conscientious and competent service
    • Only disclose the material facts that he or she already knows or ought to know – they aren’t required to take any further investigative steps.
    • Limited privacy obligations

By having the Buyer sign a Buyer’s Representation Agreement, making them a Client.

The obligations to a Client are:

    • Fiduciary: the agent must promote and protect their best interests at all times
    • Negotiate favourable terms for the Buyer
    • Maintain confidentiality
    • They must take reasonable steps to determine and then disclose all material facts about the property.

If a Buyer wants to represent themselves, they can choose to be a Customer or they can choose to refuse to sign the Customer Service and Buyer Representation Agreements.

Attending open houses as an Unrepresented Buyer

Being represented means that the prospective buyer has hired a brokerage, represented by a salesperson or broker, to assist them in their search and purchase of a property. A buyer can enter into a contract with the brokerage called a Buyer Representation Agreement or, BRA.

People are often asked “if I’m working with a salesperson” by a Seller’s representative when entering a property to determine whether they are represented or unrepresented.

Under the laws that regulate the conduct of brokerages and salespeople, if someone is represented and obliged by a BRA, a salesperson is required to communicate with them through their representative. By not following the required process, a salesperson could be in contravention of the law as outlined in – the Real Estate and Business Brokers Act, 2002 (REBBA).

Buyers attending open houses on their own, should be prepared to provide photo identification and their contact information, in case it is requested. They should also volunteer the contact information of their salesperson, if they have one. Maintaining a record of open house attendees is common and often at the request of the homeowner, for security reasons.

The myth of proceeding as an Unrepresented Buyer

Sometimes Buyers believe they can negotiate a better price if they don’t use a Buyer’s Agent preferring to proceed as a Unrepresented Buyer.  This strategy rarely works because of the way in which listing agreements are structured.

  • The Seller strikes a commission agreement with the Listing Brokerage firm for a list fee equal to a percentage of the properties eventual purchase price.
  • Based on this list fee between Seller and Listing Brokerage firm, the Seller’s Agent advertises a co-operating brokerage commission in the MLS to all prospective Buyers’ Cooperating Brokerages payable at closing in consideration for the Buyer’s Agent who brings the Buyer to the transaction.
  • The Listing Agreement (which sets out the commissions to be paid and to whom) is between the Seller and the Listing Brokerage – the Unrepresented Buyer is not a party to the agreement and not entitled to any commission. For example, a listing agreement might state that 2.5% (out of the total 5%) commission is payable to a Cooperating Brokerage. If there isn’t another brokerage involved in the transaction, the Listing Brokerage keeps the full commission.
  • Also, it’s important to note that in Ontario, commissions can only be paid to licensed real estate agents.
  • Sometimes, the listing agreement signed between the Seller and the Listing Brokerage specifies that a commission discount will be applied if there is not a Cooperating Broker – but it’s important to note that the discount is given to the SELLER – not to the Buyer. Again, the Buyer is not a party to the listing agreement. Occasionally, a Seller will choose to pass on part or all of that discount to a Buyer. Sometimes they do not and prefer to put the savings into their own pocket.
  • If there are multiple offers on a property, any discount provided to the Unrepresented Buyer has to be disclosed to all other parties with offers.
  • Most importantly, without a Buyer’s Agent looking out for the Buyer’s best interests, the Buyer risks overpaying and/or having something go wrong in the transaction.

Some Buyers incorrectly believe that they are somehow automatically entitled to half of the listing brokerage’s commission if they aren’t represented by a REALTOR®. In our experience, the people who want to represent themselves are usually stretched financially and often can’t afford the home they want and are hoping that if they can get the commission, that they’ll be closer to being able to afford the property.

There isn’t usually a financial benefit to not having an agent represent your interests. Buyer Agents are paid because they have expertise in assessing and valuing properties and neighborhoods; negotiating contracts and terms; and protecting buyer interests.