The Obligation for Showings to Unrepresented Buyers
Bill the Buyer called Bob the Listing Agent to see 123 Main Street. Bob indicated that the following would be required:
1) Bill would have to meet Bob at his office,
2) Bill would have to bring with him two Government issued photo identification documents,
3) Bill would have to sign a Buyer Representation Agreement before he left the office,
4) Then, and only then, would they proceed to the house to have a look.
Bill declined to sign a Buyer Representation Agreement so he didn’t see the house.
Now, the homeowner is upset with Bob.
Let’s stick to the Listing Agent’s obligations. There are two sides to the commission: A for selling and B for buying. The Seller has retained Bob to sell the house. Bob is supposed to sell the house. That means “showings”. I do appreciate that if there’s an unrepresented potential buyer out there, Bob would like to get both sides of the commission. Bob’s contract is really just for the one side, “A” whatever that may happen to be.
If the Seller knows that Bob won’t show the property to certain potential buyers, then Bob should get this in writing, otherwise, this is a breach of contract by Bob.
Also, if the showing goes well and Bob now “know” the Buyer, when the Offer comes in through another agent, Bob will have some valuable insight.
On the commission, it is not necessary for the Buyer either to sign an Agency agreement or Customer Service agreement for Bob to get the buying part of the commission.
Bob must explain the services that are available, but Bill doesn’t have to sign anything. Bob still get the buying part of the commission. It’s only when Bill surfaces with his own true agent at Offer time that a problem arises.
When it comes to his duties to his Seller, Bob is supposed to “show” the property, one side or two. Failure to show would constitute a breach of Bob’s fiduciary duties and entitle the owner to terminate the contract for breach.
Bottom line: you can indeed refuse provided you have “permission”. Bob cannot offer Buyer Representation to Bill without the Seller’s permission in advance. This would be a conflict of interest.
Brian Madigan LL.B., Broker