What to Look For in a Listing Agreement

When you sell your home, you will be asked to enter into a formal contract with your real estate agent. 

Known as a listing agreement, this document outlines important information about the working relationship between you, your agent, and their brokerage. These agreements are also legally binding, so before you sign on the dotted line, you’ll want to make sure you have a clear understanding of everything on it. 

First & Foremost

Be wary of handshake agreements. Regardless of how trustworthy your agent may be, a formal written agreement is the best way to ensure your interests are protected during the sale of your home. In Ontario, real estate agents will use a standardized form called the OREA 200, which is essentially a template where you and your agent will agree on the major terms and conditions of your sale. 

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The Important Details

Now that we’ve covered the importance of having a contract in place, let’s break down some of the clauses included in your listing agreement. While not a complete list, these are a few of the details with the largest implications on the outcome of your sale.  

Main Responsibilities 

The listing agreement will specify the responsibilities of both you and your agent. For example, you’ll be responsible for maintaining your home in good condition and allowing showings, while your agent will be responsible for marketing your home, negotiating offers, and handling paperwork.

Listing Price

In any market, selling your home quickly and for the highest return is all about setting the right asking price. After an evaluation of your home, your agent will work with you to determine the appropriate price. This agreed-upon price will be specified in the listing agreement. Your agreement should also clarify that you’ll need to sign off on any changes to this price.

Timeline

All listing agreements come with an expiry date. If your home hasn’t sold by the end of the listing period, you’ll have the option to extend the agreement or work with a different agent. Once again, this detail is typically negotiable. 

Holdover Clause

One important detail to be aware of regarding the timeline of your listing agreement is the holdover clause. This clause stipulates that if a buyer discovers your home while the listing agreement is active, but doesn’t actually purchase the home until after it has expired, you would still owe the brokerage a commission if the sale occurred during the established holdover period. The length of a holdover period is negotiable so you and your agent will need to come to an agreement on how long it will be. 

Commission

The term ‘commission’ refers to the fee that your real estate agent will receive for selling your home. This is one of the biggest costs you’ll incur as a seller. Commission rates are negotiable, however, in Ontario, they typically range between 3% and 7% (of the home’s final sale price). 

Disclosure

Your listing agreement will also include a section on disclosure, which outlines your responsibilities to disclose any known defects or issues with your home to potential buyers.

Termination Clause

It’s important to remember that your listing agreement is a binding contract. From a legal perspective, walking away from your agreement isn’t as easy as simply finding another agent to work with. 

That said, to protect the interests of you and your agent, your listing agreement will likely outline a few circumstances in which either party can terminate it. However, these clauses may require you to provide tangible evidence or make a formal case to the brokerage before you’re officially able to move on. There could also be a termination fee or similar one-time cost associated with cancellation. 

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Unique Agreements – Your Hold Sold Guaranteed

In addition to a standard listing agreement, your real estate agent may provide exclusive, add-on offers or services as part of your sale. 

Vaughan’s top-performing real estate group, the Lino Arci Team offers our sellers a ‘Your Home Sold Guarantee’. This is a one-of-a-kind promise that helps eliminate the stress and potential pitfalls of home selling. Put simply, if you choose to work with us, and your home doesn’t sell (for any reason) we will buy it from you! 

Are you ready to sell your home? Our team is proud to offer industry-leading support for our clients. Get in touch with our team today to learn how we can offer you a risk-free real estate journey.