Thoughts on agent remuneration

Prior to the mid nineties, for the best part of a century, we real estate agents were quite clearly salespeople. We operated under sub-agency; our fiduciary duties accrued only to the Seller and, as salespeople, sale-contingent commission was the appropriate remuneration. In the '94 to '96 timeframe all that changed. Depending on where one practiced, Buyer Agency came into vogue and with it, in my opinion, a mandate to "stop selling" and "start representing." Our selling culture, however, was so deeply entrenched we continued to operate as salespeople but embellished our selling with a lot of talk about "representing our clients" on whichever side of the transaction we found ourselves.

The common, or case law, and industry regulations in most jurisdictions are clear that our agency duties are fiduciary in nature, i.e. a REALTOR® serves a client in a position of trust. That is further defined as placing the client's interest above all others including our own. Such is the nature of being a true professional - providing skilled services and impartial advice in exchange for a fee.

Whether agents are paid by a flat fee or percentage commission, if such remuneration is contingent on a sale taking place, the agent clearly has an interest in the early completion of the transaction. That interest logically conflicts with the impartiality required of a professional. What if the best advice to one's client around a buying decision happens to be that which would delay, reduce or eliminate one's commission check?

The only protection the client has in this circumstance is the agent's ethic, because the remuneration model is an incentive to self-interest, not impartiality. Perhaps we would do well to extend our thinking outside of our traditional agent-centric box to better integrate our role, practice model and remuneration systems in the interest of being truly professional.

Ron Stuart, REALTOR®, ACRE®
HarbourSide Realty Ltd.
Halifax, Nova Scotia.