What sort of questions should I ask before I sign a listing agreement? Part 1
A listing agreement is a legal contract stating that you agree to work exclusively with a real estate brokerage for an agreed-upon length of time when you’re in the market to sell your home. The agreement makes you a client of the brokerage, meaning it owes you a fiduciary duty to act in your best interests in a real estate transaction.
Whenever you’re asked to sign an agreement with a brokerage, you should read it, understand it completely, and discuss it – line-by-line – with your salesperson. You would also be well-advised to show it to a lawyer who is understands real estate law.
How long does the agreement last, and does it have a “holdover clause”?
You can expect an agreement with a brokerage to clearly specify the date it takes effect and the date it expires. Terms can vary, but if you agree to a term longer than six months, you will be asked to write your initials next to the expiry date, in addition to signing the agreement. You’ll also need to know if the listing is an exclusive contractual arrangement or a Multiple Listing Service® agreement where your home is posted on the MLS online database.
It’s not uncommon for a listing agreement to contain a holdover clause. This means that for a certain length of time after the agreement expires, you could owe the brokerage a commission if you sell your home to a buyer who viewed the property when the agreement was in effect.
You’re under no obligation to accept any offer, and you can suspend the listing at any time, but the agreement will remain in effect until the expiration date. If you decide to terminate the agreement before the expiry date, you will need the brokerage’s consent in writing.
What should we establish for a listing price, and how long do you think my home will be on the market?
An experienced real estate salesperson or broker should be able to provide you with ballpark estimates for what they believe the home will sell for and the length of time it will take to sell, based upon sales information for similar properties in your neighbourhood and surrounding communities. When you interview potential salespeople, ask each one to provide you with a comparative market analysis; it will give you a sense of the quality of their research and knowledge of the area.
How much are your fees?
Fees and commissions are not set or approved by the Real Estate Council of Ontario (RECO); they vary by brokerage, and often depend on factors such as the level of service or marketing that you are seeking.
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.