What conditions bind you and your real estate agent? If this is your first home, you are selling and buying with this agent, or third, always make sure, you have all the documents in order and your Realtor is ready to make everything he can to sell your home. Here's a closer look at your relationship with your real estate professional and all the steps you need to take, before listing your property. We also explained hard questions like contractual obligations and multiple representations.
The Listing Agreement
The first formal step in marketing your property is entering into a Listing Agreement – a contract that commits Jamie as your real estate professional to actively market your home on your behalf, and list it on the MLS, for a specified period of time. It also commits you to paying commission, in the form of a percentage of the sale price of your home, upon the successful closing of the sale. The document will specify the exact amount of the compensation authorized to be offered to other brokers acting as agents for the buyer(s) of your home, when their services enter into the transaction.
The Listing Agreement sets out your property address, asking price and conditions of the arrangement between you and your Realtor®, as well as the length of time the agreement is valid for. Once the agreement has been signed, and as of a mutually agreed upon date, Jamie will be authorized to move forward with showcasing your home on the Toronto Multiple Listings Service system and moving forward with the rest of the advertising plan. Let the active marketing begin!
Other Listing Documentation
In addition to the Listing Agreement, additional forms will come into play, including the MLS Data Information Sheet, which will include a large number of specific details about your property to be sold. This information will assist in the sale of your home; along with professional photographs of the property, it is the first snapshot a buyer will get of what your home has to offer. Jamie will be able to answer many of these questions (such as number of bedrooms) simply by examining your home and/or looking at previous listings for the property, but other answers will have to be verified by you, the seller.
Other information that will be put in writing and agreed upon by all parties for a successful listing includes:
- Granting the ability for Jamie, representing PSR Brokerage, to place a sign and/or a lockbox on the property as well as to advertise it in the media
- Jamie’s obligation to ensure you are advised of all laws and regulations which may have an impact on the transaction
- Full disclosure if Jamie happens to have any relationship to, or interest in, the property to be sold (to inform buyers of a potential conflict of interest)
- Your obligation to inform Jamie of anything you know that bears on the property's condition
- The brokerage’s obligation as Deposit Holder to place the buyer’s deposit in an interest bearing real estate trust account on your behalf (once a deposit is submitted by a buyer for your home)
- Confirmation that FINTRAC (The Financial Transactions and Reports Analysis Centre of Canada ) requirements have been met by both listing broker and cooperating broker (recently introduced government requirements for client identification that involve obtaining government issued photo ID, address, date of birth, and other information to retain on file as a fraud prevention measure)
- A summary of all the items that you have agreed will be sold as part of the property (generally listed under either the Chattels or Fixtures categories; fixtures are usually physically attached and are regularly sold along with a property, such as built-in kitchen appliances, heating and air conditioning systems, and installed carpeting. Chattels are items which are generally not physically attached, such as window coverings, electric light fixtures, and microwave ovens)
Details and dates, if you plan to hold back offers during the listing period
Though the Multiple Listing type is by far the most common, there is also such a thing as an Exclusive Listing. In the Multiple Listing, of course, the brokerage is authorized to market your property through the MLS. When your home sells, there will often be two separate brokers involved in the deal: Jamie’s, and a different one representing the buyer (though there is a good chance that, due to its huge market share, a PSR brokerage will also represent the buyer!).
With an Exclusive Listing, Jamie’s brokerage has the sole right to locate a buyer for your property within the specified time limit. In other words, the listing agent has the sole right to sell the property. That means that even if you somehow find a buyer of your own and sell your home to him or her during the term of the listing, you must still pay the agreed commission to your agent, unless that buyer was specifically named and excluded on the Listing Agreement. Even after the exclusive listing expires, you may be obligated to pay the commission, but only if you sell your property to a person who buys because of Jamie’s actions during the listing period. This type of agreement typically does give your agent the option of sharing his commission with any other licensed real estate agent who is able to find a buyer for your property.
Listing Agent’s Duties to You
When you enter in to a Listing Agreement, the agent (which is really the brokerage, as represented by the individual Realtor®) is governed by a strict Code of Ethics and is legally obliged to ensure all parties are treated fairly and with the highest possible level of service. These are the fiduciary duties that an agent owes to their client:
- Accountability – The agent must maintain accurate record keeping and responsibly hold all funds and monies on behalf of the client.
- Confidentiality – The agent must not use any information received from the client in a way that may harm or negatively affect the client
- Competence – The agent must maintain a sufficient level of knowledge and skill and exercise the care and professionalism shown by an average person in the field
- Good Faith/Full Disclosure – The agent is required to disclose any direct or indirect personal interest they may have regarding a transaction, as well as any known relevant information that may affect the value or desirability of a property to the client
- Loyalty – The agent must always place the interests of the client above all else except the law and must act solely in the best interests of the client
- Obedience – The agent must follow the clients’ lawful instructions regarding a transaction whether the agent agrees with them or not.
This occurs when the agent acts on behalf of both the buyer and seller. But don’t let this scenario alarm you: remember, for the purposes of a contract, ‘agent’ means ‘brokerage’. So if you are under a Listing Agreement with Jamie, and the buyer is represented by an agent at his same brokerage (PSR Brokerage), this is considered a Multiple Representation situation; even though Jamie himself is still looking after your best interests, every step of the way.
Multiple representation situations are fairly common and must be acknowledged by all parties in writing prior to any offer being submitted.