BROKERAGE REPRESENTATION

Under a brokerage representation agreement, the brokerage and all its agents are bound by the same duties to the client, including representing the best interests of the brokerage’s client. Any alteration of the brokerage’s duties would apply to all agents within the brokerage.

Under a designated representation agreement, the designated representative identified in the agreement is responsible for representing the best interests of the client. The brokerage, and other agents employed by the brokerage, must treat the client in an objective and impartial manner.

MULTIPLE REPRESENTATION

Under brokerage representation, multiple representation arises in the following two circumstances:

• The brokerage has a seller client and one or more buyer clients in the same trade.
• The brokerage represents more than one competing buyer in the same trade, even if the property is listed by a different brokerage.

Under designated representation, multiple representation arises in the following two circumstances:
•The same agent is the designated representative for a seller client and a buyer client in the same trade.
•The same agent is the designated representative for more than one competing buyer in the same trade, even if the property is listed by a different brokerage.

If a brokerage is using both forms of representation agreements, (Brokerage Representation & Designated Representation) multiple representation also arises :
When the brokerage has more than one client in the same trade and one of the clients is under a brokerage representation agreement.
Brokerage representation
Brokerage representation means that all of the brokerage’s agents are bound by the same duties and obligations as the brokerage. They must promote and protect the best interests of the client. They owe an undivided loyalty to the client.

MULTIPLE REPRESENTATION UNDER BROKERAGE REPRESENTATION: 

When a brokerage engages in multiple representation under brokerage representation, its loyalty to each of its clients involved in the same trade is divided. The brokerage can no longer promote and protect the best interests of each of its clients in the trade and cannot advocate for the clients’ interests in all aspects of the trade. The alteration of duties and obligations at the brokerage level applies to every agent employed by the brokerage.
This means the brokerage and all its agents must not offer advice on matters such as a price or other terms that would be in only one of their client’s best interests to include or to accept. The brokerage and its agents must not offer any advice to one client that is not in the best interests of the other client. The brokerage and all its agents must treat each client in an objective and impartial manner, and not put the interests of one client ahead of the other. Under brokerage representation, it does not matter if each client is working with a different agent employed by the brokerage or if the clients are all working with the same agent. The services and representation are limited in the same way.

EXAMPLE:

Two agents, Raj and Stephanie work for the same brokerage. Raj is working with the seller and Stephanie is working with a buyer.  Both clients are under brokerage representation agreements. This means the brokerage and all its agents,
including Raj and Stephanie, are representing the seller client and the buyer client.
If Stephanie’s buyer client expresses interest in the property of Raj’s seller client, the brokerage is now in
multiple representation.
When multiple representation is identified, Stephanie and Raj must immediately disclose the multiple representation and seek consent from both the seller and buyer to continue. If one or both of the brokerage’s clients do not consent to multiple representation, one of the brokerage’s clients must be released to receive full representation with a different brokerage.
If both of the brokerage’s clients consent to multiple representation:

• Raj can’t provide any advice about the price to accept or about the contents of the terms of the
• Stephanie can’t provide any advice to the buyer about how much to offer or what terms to include in the offer.
• Raj and Stephanie can’t provide any advice that might not be in the best interests of both clients.

For Clients : Multiple representation is a risky situation for a client who is no longer benefitting from the expertise of their agent. For the clients, the only way to avoid the risk and benefit from full representation is to seek representation from a different brokerage.

For Agents : It’s also a risky situation for agents who are particularly inclined to be helpful. It can be very difficult not to provide advice or continue to advocate for the best interests of the client that the agent has been advising and advocating for up until the multiple representation arose.

For More on Designated Representation , Click Here