Information Guide Explained #3

The Self-represented Party (SRP)

This section is entitled “Know the risks of representing yourself”:

“If you are involved in a real estate transaction and are not a client of a real estate brokerage, you are considered a self-represented party. This means that you have chosen to represent yourself, which has different rights and responsibilities. Very few buyers or sellers make this choice.

There are significant risks to representing yourself in a real estate transaction if you do not have the knowledge and expertise required to navigate the transaction on your own. You will be dealing with a seller or buyer who is benefitting from the services, opinions, and advice of an experienced real estate agent.

RECO recommends that you seek independent professional advice before you proceed as a self-represented party.

If you choose not to work with a real estate agent, it will be your responsibility to look after your own best interests and protect yourself. This may include things like:

• making inquiries about zoning, permitted property use, or any other aspect of the property;

• determining what you believe to be the value of the property you are buying or selling;

• determining how much you are willing to offer or accept;

• navigating competing offer situations;

• deciding what terms you want to include in an offer or agreement of purchase and sale; and,

• preparing all documents.

The real estate agent is working for another party in the transaction

It’s important to be aware that the agent has a legal obligation to act in the best interests of the person on the other side of the transaction. If you are a buyer or even just inquiring about the property, for example, and the agent is working for the seller — the agent has a duty to do what’s best for their seller client.

Be aware that the agent is obligated to share anything you tell them with their client, which might not be in your best interests to tell them, including:

• your motivation for buying or selling the property;

• the minimum or maximum price you are willing to offer or accept; and,

• your preferred terms or conditions for an agreement of purchase and sale.

The agent cannot:

• provide you with any services, opinions, or advice;

• do anything that would encourage you to rely on their knowledge, skill, or judgement; or,

• encourage you to represent yourself or discourage you from working with another real estate agent or brokerage.

Any assistance the agent offers you:

• is a service to their client, not you;

• is in the best interests of their client, not you; and,

• is to help their client sell or buy a property.

The agent must give you RECO’s Information and Disclosure to Self-represented Party form and walk you through it before they can provide you any assistance. You will be asked to confirm you received it and understand what it means to be a self-represented party.

You have the right to change your mind

If you’re concerned about completing a transaction on your own, or you need advice from a real estate agent, you can choose to become a client of a real estate brokerage at any point during the transaction (see Signing a contract with a real estate brokerage on page 6).”

COMMENT

The above explanation is relatively straightforward. You are on your own unless you hire somebody. So, you are responsible for all the risks that you assume.

This also applies to very sophisticated parties including real estate investors, lenders, large commercial and residential landlords, banks, builders, developers and lawyers. That’s fine. They probably know more than the real estate agents anyways.

However, that is not the case with the unsophisticated consumer who is buying or selling on their own. Be cautious! Don’t reveal any information which you wish to keep confidential. And it’s probably quite wise to have a real estate agent assist you. In the very worst case, you would have someone to sue with deep pockets (liability insurance). You cannot sue yourself if you are the one making mistakes!

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com