A Listing Agreement is a legal agreement between a real estate broker and property seller to authorize the broker to act on behalf of the seller in the sale of property. You can find a copy of an example Listing Agreement here.
The first aspect of the agreement is determining if it is a Multiple Listing Serve (MLS) Agreement or Exclusive Agreement. In an MLS, the real estate agent will post the listing of your home through the Multiple Listing Service. Through an MLS Agreement, the exposure of your home will be higher than with an exclusive agreement. In an Exclusive Agreement, the agent will market the home on your behalf. With an exclusive agreement, you will have more control over who sees your home, as well as maintain an added level of privacy. Commission rates can be lower because there are no MLS fees.
- Real estate brokers have high quality prospects—those who are qualified, those who will bring the better offers
- Simplified negotiation—price to conditions to closing date
- A thorough account and accurate information of the property being sold—many transactions fail because of incomplete or inaccurate information about your property
- Dedicated to the interest of the seller
- This agreement creates a mutually beneficial relationship that makes the sale of the property possible for the maximum price in the shortest time
- Your real estate agent will handle all paperwork
The agent may be focused on selling the fastest, not necessarily at the best price
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COVID-19 Clauses in That Buyer’s May Add to The Purchase and Sale Agreement
Due to COVID-19, the Ontario Real Estate Association has put forward a “Schedule B” to include clauses to protect buyers and sellers from penalties due to closing delays. These clauses include:
- Paperless Closing
- Delay of Closing if Third Parties are Unable to Close
- Delay of Closing and Title Insurance
- Automatic Delay of Close if Either Party is Quarantined and Cannot Sign
Learn more about the COVID-19 clauses and agreement terms that are important to buyers in the Buyer’s Representation Agreement.
Top 5 questions to ask yourself before signing a Listing Agreement
1. Is the information on the agreement correct?
- Names of brokerage and seller(s)
- Desired list price
- Location (address)
2. Am I happy with the length of the agreement?
- These agreements typically last 3 or 6 months
- Shorter is better for your interest, and you will have the option to renew
3. Do I understand how my agent’s commission will work
- The agreement’s commission clause will state the amount of total commission, as well as the part of that percentage being offered to the buyer’s brokerage
- Typical commission is 5%-6% of the sale’s proceeds
4. Do I understand the terms of the holdover period?
- This details the period after the agreement expires that you would still need to pay your real estate agent commission if you sell the property after agreement’s expiration
- This period typically lasts 30-90 days after the agreement’s expiration
5. Is my agent only representing me?
- Multiple representation occurs when the real estate agent OR broker represents both the buyer and the seller in a transaction. With multiple representation, no information will be confidential.
- In Ontario, a multiple representation agent or broker is required to disclose information to both the buyer and seller, and receive written consent from all parties (a standard OREA Confirmation of Co-Operation and Representation form)
- In British Columbia, multiple representation is prohibited, effective March 15th, 2019
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Working with the Same Agent for Buying and Selling
- Your agent knows you best
- Some real estate agents may give a discount on commission—be sure to mention this during negotiation
- Time: The are able to coordinate both sides to minimize the stress and hassle
- Relocation: If you are relocating to a new area, the agent may not specialize in the market of the area
- The real estate agent may specialize in just buying or selling, rather than both