The “Listing Agreement” is the document that gives a brokerage legal permission to list your house in the market. This document
- Clearly defines your relationship, your roles and responsibilities
- Supplies details on the property that are then used to promote the sale on the MLS (Multiple Listing Service)
- Helps buyers make offers on your listed property. Any offer that is made is based on the listing agreement.
Salient features of a Listing Agreement
The most important function of a listing agreement is to establish your relationship with the brokerage. It also defines a time limit for the REALTOR® to ensure your home is sold.
Exclusive or Multiple Listing Service?
When listing your home, you can have it listed as an “Exclusive Listing,” which means that your real estate brokerage will find buyers for your property. However, we strongly recommend listing your home in Multiple Listing Service. MLS is a powerful search tool used by and paid for by REALTOR®
The Multiple Listing Service can help promote your property much widely to real estate agents without costing you anything extra. Ensure that you provide full details about the property so the search filters within MLS can bring up your property in search results in multiple ways. For example, MLS allows you to search for properties by area, the number of rooms, washrooms, square footage, and many other features to refine search.
At the end of the day, the most important factor in making a successful sale is to list your home at a price that the buyer cannot refuse. Your REALTOR® will advise you on how to arrive at that magical number.
Real Estate commission.
This commission is a negotiable percentage of the value of the property or the final price. The seller pays this commission to the brokerage once only when the sale is final. The industry rate is 2-3 percent but varies with area and the brokerage you are working with. So go ahead and shop around to get a deal that gives you the most bang for your buck.
Description of your property.
This is a very important aspect of the listing agreement and should be done meticulously. This includes describing your property accurately in terms of the square footage, how old the house is, the construction style, number of rooms, washrooms, kitchen, any upgrades that have been done. In addition, any unique features of your property such as proximity to schools, train stations, shopping malls, or parks and recreational areas.
Includes information such as land surveys, zoning codes and lot numbers.
Includes information on requirements such as the minimum amount of deposit when making an offer. If you have a low-interest mortgage that can be taken over or assumed by the buyer has the potential to attract more buyers.
Date of Completion
The date of completion refers to the time when you will actually vacate the house after your home sale. This time varies, but 60 and 90 days is quite standard.
Home showings are arranged by your REALTOR®. They will organize appointments and follow up on any specific instructions.
What does your listing price include?
Contrary to popular belief, sellers must clearly specify what is it that is included in their listing price. The inclusions are divided into two categories- Fixtures and Chattels. Fixtures refer to items that cannot be moved from the house. This category includes improvements like central air conditioning, pot lights, central vacuum machines, fresh paint etc.
Chattels are items that can be removed and include things like washing machines, dryers, refrigerators or other appliances. Sellers will often indicate the newly added appliances to add to the appeal of the house. In most cases, unless otherwise specified, chattels are included as part of the listing price.
The listing agreement should clearly specify what fixtures and chattels are included in the price of the house.
Seller Property Information Statement.
This document serves as a status report on the property. More and more real estate boards have started requesting property information statements. This statement provides information on any visible or hidden defects in the house, as well as the type of renovations done.
Spilling the beans on any faults
If you have any issues in the house that needs repair or attention, then they must be made known in your listing agreement. This could mean a leaking basement, a plumbing problem, or a pest issue. If you try to cover it up and it comes to light, then one of two things can happen. If the problem is discovered before the sale, it may put a big question mark on the status of the entire house. If the problem is detected after the sale, you may be sued for the cost of repairs.
Will the policy of honesty affect my sale?
Having a defect in the house does not mean that your house will not sell. It just means that you tell the buyer that because of the defect, you have lowered the price to pay for the cost of the repairs. This way a buyer is able to anticipate repair costs and enter the sale with greater confidence.