If I sign a Listing Agreement, what are my responsibilities?
Back in July, I wrote about the responsibilities a consumer takes on when they sign a Buyer Representation Agreement (BRA) with a real estate brokerage. Sellers have rights, but they also assume certain responsibilities when they apply their signature to a listing agreement, and it’s definitely worth the time to understand what those responsibilities are.
A listing agreement is a legally-binding contract and signing one makes you a client of a real estate brokerage. When you’re a client, the brokerage owes you a fiduciary duty. That means your salesperson and other brokerage employees must follow your instructions, protect your confidential information and promote your best interests in a transaction. In return, you agree to work exclusively with that brokerage for an agreed-upon period of time when you’re in the market to sell your home.
Sellers sometimes enter into co-listing agreements – that’s when more than one brokerage represents the sale of your home. Sellers co-list for a variety of reasons, such as when a couple separates. If you choose this option, make sure the total commission you agree to pay is stated in the agreement, and it’s clear the listing brokerages are splitting the listing-side commission between themselves.
Even if you find a buyer completely on your own, you might have to pay your salesperson a commission as long as the agreement is in effect. You could even owe them a commission for a period of time after the agreement terminates if the agreement includes a holdover clause and you sell your home to a buyer who was introduced to you by your salesperson during the term of the agreement.
Your first responsibility as a seller is to read the agreement and ask some important questions: does the agreement include a holdover clause, and if so, how long does it last? Who pays the costs of special services such as staging your home: you or the brokerage? How will the home be shown to interested parties, and what are the details of the marketing campaign? And lastly, you need to have a thorough understanding of the total commission obligation, any special details, bonus or reduction circumstances, and how the brokerage(s) participating in a sale will be compensated.
Don’t be afraid to ask your salesperson to clarify certain sections or walk you through it, line-by-line. They expect you will have questions and want you to understand what you are signing. You would also be well-advised to hire a real estate lawyer early in the home-selling process and show them the agreement before signing.
You also have a responsibility to be honest and upfront with your salesperson and potential buyers about your home’s features and overall condition so the listing information is accurate and potential buyers know what they’re getting.
If you have a question for Joe about the home buying or selling process, please email firstname.lastname@example.org.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.