If you are selling a property, you need to be aware of your options when listing it with a realtor. The real estate listing agreement is usually a partially preprinted form with standard clauses and wording. The balance of the agreement, completed by the agent and the vendor, covers the specific information with respect to the property being offered for sale and the nature of the contractual bargain between the agent and vendor. Since the listing agreement is a binding legal contract, you should be very cautious about signing it, and fully understand the implications of what you are signing.
A listing agreement performs two main functions. First, you are giving the real estate agent the authority to act on your behalf to find a purchaser for your property. The agreement sets out the terms and conditions of this agency relationship, including the commission rate or method of compensation for the agent’s services, the length of time of the appointment, when and how the fee or commission is earned, how and when it will be paid to the agent, and the various marketing steps the agent will take to sell your property.
A second part of the listing agreement is setting out of the details of the property being offered for sale. All pertinent details should be included, such as civic and legal address, list price, size of property, description of the type of property, number and size of rooms, number of bedrooms, type of heating system, main recreational features and other amenities. Any chattels or extra features that are to be included in the list price should also be included, such as appliances, draperies and drapery track, and carpeting.
You should also insert other particulars in the listing agreement relating to the property for sale, including details of existing financing, the balance on the mortgage, the amount of monthly payments and the due date on the mortgage. Any other mortgages should be listed as well. Annual property taxes should be noted, as well as any liens, rights of way, easements or other charges on the property.
Once you have come to an agreement on all the terms and are satisfied with them, the agreement is signed and witnessed, and you receive a copy.
There are two types of agreements that you may wish to consider when listing your property with a real estate agent: exclusive listing, and multiple listing.
Exclusive listing
In this example, the vendor gives to the real estate agent an exclusive right to find a purchaser for the property. This right is given for a fixed period of time, normally 30, 60, or 90 days. You can always extend the listing if you are satisfied with the performance and service. The commission is generally about five per cent on the first $100,000, and two and a half per cent thereafter. If it is raw land, a flat 10 per cent commission is common, as it is generally more difficult to sell. Commissions can vary and can be negotiable, depending on the circumstances.
Multiple listing
With a multiple listing, a realtor is given the right to list the property with the multiple listing system (MLS). This system is computerized, and is available to all members of the real estate boards who participate in the MLS. In practical terms, this constitutes almost all real estate companies; the entire real estate network becomes a group of sub-agents for the sale of your property. If some other agent finds a buyer, the selling company and the listing company split the commission. Multiple listings are generally for a minimum of 60 days, but this is negotiable. Commission rates are generally seven per cent on the first $100,000, and two and a half per cent thereafter. As with exclusive listings, the commissions can vary and can be negotiable, depending on the circumstances.
