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My Top 7 Listing Agreement FAQs

Jun. 21, 21 | Selling

Couple sitting with real estate agent

You’ve made the big decision to sell your home. Congratulations! This is an exciting time. Now it’s time to meet with an agent you trust and discuss what exactly is involved. One key component is the listing agreement.

For many sellers, the listing agreement can be a little intimidating, but in this post, I am breaking down the top 7 listing agreement FAQs you need to know before signing:

1) What is a Listing Agreement?

Simply speaking, a listing agreement is a contract between the homeowner and the listing agent. It essentially gives the real estate agent permission to sell the property on behalf of the homeowner. It’s a legally binding contract that both parties must agree on and abide by.

3) What are the Main Components of a Listing Agreement?

There are several types of listing agreements depending on the property being sold. The most common type of listing agreement is an MLS (Multiple Listing Service) Agreement, which allows your property to be listed on the national MLS website.

Listing agreements like this are comprehensive, they include everything that goes into the sale of your home. Some topics that are outlined in the listing agreement include:

  • Listing agreement commence date and expiry date
  • Marketing strategy (MLS listing, for sale signs, online and print marketing etc.)
  • Rights granted to use listing content subject to copyright in the promotion of the sale (virtual tours, home descriptions, images, floorplans, etc.)
  • Legal clauses such as lawyer fees, provisions for dispute resolution, and mediation
  • The agent’s commission for both selling and cooperating agents

4) Why do I Need to Sign a Listing Agreement?

Anyone who works with a real estate agent needs to sign a listing agreement. It sets the stage for a successful real estate transaction and protects all parties involved. By outlining and agreeing to the terms in writing beforehand, it holds everyone accountable for their actions and ensures a smooth and stress-free process. This is why it is so important for sellers to read the listing agreement carefully and make sure they understand each line.

4) When do I Need to Sign a Listing Agreement?

The listing agreement is typically signed whenever you are ready for the real estate agent to begin actively marketing your home. For some homeowners, this could be the first time they meet their agent. For others, this step could happen weeks or months down the road. It all depends on your unique timeline.

5) What is the Length of Time a Listing Agreement Lasts?

As a legally binding contract, the listing agreement will have an expiration date attached. The agreement is valid from the moment you sign it until the expiration date. This date could vary depending on a number of factors. For example, if the market is quiet or the condition of your home is not at its best, the expiration date might go a little longer. In a busy market and a property that is in demand, you might see a shorter expiration date. Typically, the agreement lasts between 2-6 months of signing. Anything that lasts longer requires additional acknowledgment.

6) How Does Commission Work on a Listing Agreement?

The listing agreement is where the agent’s commission is outlined. In Ontario, it’s common that sellers are responsible for paying both the listing agent and the buyer’s agent commission. In many cases, the commission is evenly split between the two. For example, your listing agreement could state that you pay 5% commission to the agent and have that figure split evenly between the two agents–so both would receive 2.5% commission.

7) How Much Does a Listing Agreement Cost?

A listing agreement does not cost anything to prepare to sign. Rather, it’s a contract that stipulates the compensation that the agent will receive upon successfully selling your property.

Signing A Listing Agreement Shouldn’t Be Scary

If you’re feeling tense or unsure about signing a listing agreement, you should consider why you are feeling reluctant. Are you signing with the right agent? Are you comfortable with the terms? At the end of the day, the listing agreement is designed to protect you as much as it is to protect the agent. By taking the time to fully understand the terms, you should feel confident moving forward with an agent you can trust!

Looking to sell? Contact me today to learn more.