Before you sign a seller representation agreement, commonly known as a listing agreement, there are three important steps you should take: read it, understand it and discuss it with your would-be real estate representative. By taking the time to think about this issue, you’ve already put yourself on the right track.
After all, you’re entering into a binding contract to work with a brokerage for a set amount of time (even though you’ll be working with the person, your contract is actually with the place where they work). It’s not something to be taken lightly.
That’s why you should talk to your representative if there’s something in the agreement that you’re not sure about. That applies whether it’s the length of the agreement, the commission and fees that you’ll pay, the services that you will receive or any other aspect of the contract.
Common concerns include the length of the agreement and whether that reflects how long it will take the property to sell. Every representation agreement with a brokerage must clearly and prominently specify the date it takes effect and when it expires. Additional requirements apply if the term of a representation agreement is longer than six months, and terms longer than six months must be specifically initialled by the buyer or seller next to the expiry date, in addition to their signature on the agreement.
Ask your would-be representative for an estimate of how long it will take to sell your home for your desired price. With that information in mind, you can ask if it’s possible to alter the length of the agreement.
Fees and services are another key component of the listing agreement. Brokerages offer a wide variety of services with different cost levels to match. That’s why it’s important to make sure you’re clear on what services you will receive. For example, will they provide an analysis of local market conditions to help you set a selling price? Will they host one or more open houses? Before you sign on the dotted line, it’s important to make sure you have a mutual understanding that is reflected in the agreement.
It’s also important to note that listing agreements typically include a “holdover clause” that is in force for a period after the contract expires. Imagine that, shortly after the listing agreement expired, you sold the property directly to a buyer who viewed the property while you were under contract with the brokerage. If the holdover clause was in effect, commission could still be payable to your brokerage. This is the most common situation, but there may be other instances where the holdover clause could apply.
If you can’t reach a satisfactory understanding with your brokerage on the terms of the listing agreement, it may be worthwhile to see if there’s another brokerage that can meet your needs. With about 5,000 brokerage locations in Ontario, you’ve got a lot of options.
Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to firstname.lastname@example.org . Find more tips at http://www.reco.on.ca/home-buyers-sellers/resources/ask-joe/ reco.on.caEND, follow on Twitter https://twitter.com/recohelps @RECOhelpsEND or on YouTube at https://www.youtube.com/user/RECOhelps youtube.com/RECOhelpsEND.