Listing Your Home: The Process
Your Real Estate Agent will meet with you to sign the Listing Contract. The listing contract establishes a professional relationship between you and your brokerage for a given period of time. It details the obligations of the brokerage and the seller. It is officially called a “seller Brokerage Agreement”
You should have the following documents available for your agent prior to meeting, to facilitate the process.
- A copy of your deed
- A copy of the Survey and /or location Certificate for the property
- A copy of any covenants applicable to the property
- A copy of your tax bill
- A copy of your assessment notice
- Heating and electrical costs for the year
- Any information and associated costs for any renovations done to the home(where available)
- A copy of your occupancy permit(if available)
Types of contracts
- Exclusive listing contract: In an exclusive listing contract, the seller agrees not to use the services of another brokerage for the sale of his property. This type of contract guarantees to the brokerage that their efforts to sell the home will be compensated at the time of the sale. The seller can also expect their brokerage to devote maximum time and effort to sell the property. The brokerage will cooperate with other brokerages unless instructed by the seller to do otherwise.
- Multiple Listing Service: A property can be listed exclusively with the option of placing it on the MLS, which is a cooperative marketing system of member brokerages. This means the property is marketed through the MLS where the information on the property will be shared with all members of the MLS system. The MLS is operated under licence by the Canadian Real Estate Association.
Content of the Listing Contract
The listing contract specifies the obligations to which the brokerage and the seller have agreed. The following are the main elements the contract must contain.
- Identification of the parties: The listing contract must identify the parties bound by it and must include the name of the brokerage and the name and address of the owners
- Term of the contract: The term specifies when the contract will begin and when it will expire.
- Description of the real estate: When you are selling your home several important details must be collected and verified right from the beginning including lot size, general condition of the house and its main components. It is essential that you provide your brokerage representative with all the information pertaining to the real estate, as well as all documents that will allow them to fulfill their role. The listing contract must contain a detailed description of the real estate including address, lot measurements and area, property details and what does and does not remain with the sale of the property.
- Selling price: An essential step in the sale of your home is to set a realistic selling price.This is important as real estate that remains on the market too long tends to lose value in the eyes of the buyer. Should the seller wish to change the asking price or any details during the contract, an “Amendment” form must be completed to do so.
- Inclusions and exclusions: The question of included or excluded items must be examined closely before the listing contract is signed. This step of the sale process is too often a cause of dispute between the sellers and buyers. This is why we recommend that you specify as many elements as possible. The best way to do this is to detail every item that could lead to confusion by specifying those which will be included and those which are specifically excluded. Some items to consider are: curtain rods, blinds and window treatments, appliances, central vac system and attachments, alarm system, air conditioning units, wood stoves or pellet stoves, shelving units, sheds, children’s outdoor play sets, outdoor decorative lighting etc.
- Occupancy: The dates of occupancy should be specified in the listing contract. The buyer may propose different dates in the offer to purchase, but these are subject to the seller’s approval just as all the other clauses in the offer to purchase.
- Brokerage Compensation: The amount and conditions of the brokerage’s compensation must be specified in the listing contract. The brokerage’s compensation is usually based on a percentage of the property’s selling price, but can also be a fixed sum. The compensation is normally paid on the closing of the sale.
- Declarations by the Seller: The seller must use reasonable means to provide accurate information to the brokerage. The Property Condition Disclosure Statement filled out by the seller must include any factor which might reduce the value of the house. Eg: Was there ever flooding of the home? Is there a particular feature of the real estate that renders it uninsurable or increases the insurance premium?
- Obligations of the seller: The listing contract clearly states the obligations of the seller. These obligations deal with exclusivity, the contract term and the details describing the real estate.
- Obligations of the brokerage: The obligations of the brokerage are also specified in the listing contract. They deal with loyalty, competence, duty to inform and verify information, advertising, obligations to disclose, conflicts of interest, etc.
- Signing of the listing contract: As your agents we will read all clauses of the contract together, and discuss any areas of concern, before having you sign the agreement. Do not hesitate to ask questions if any clause is unclear.
- Verification of Information: Your brokerage representative will give you a copy of your home’s detailed information sheet so that you can make sure the statement on the listing contract reflects your property accurately. If there are errors your agent must correct them and give you a revised copy. The listing sheet will be used to market the property and will be supplied to any person interested in the property.
- Effective Date: The listing contract becomes effective as per the date on the contract, as soon as you receive your duplicate copy of the contract signed by you the seller, and the brokerage representative. The term cannot be changed unless the brokerage and seller agree in writing.
- Holdover Clause: Listing agreements contain a clause to protect the brokerage for the work it did during the listing period. The hold over clause requires the seller to pay the commission to the brokerage should a buyer, that was introduced to the property during the listing period, enter into a purchase and sale agreement with the seller during the holdover period, usually 180 days after the listing expires.
Now that all the paperwork is complete, and the marketing is in place, the showings begin.
Booking and arranging showings
- Your agent will call you when there is a showing request from an agent with a client wishing to view your home. Hopefully you will receive at least 24 hours notice of a showing, so you have time to do that last minute tidying and preparations for the showing. This is not always the case, as sometimes there are short notice requests. Of course, you can always say no if the prospective purchaser wishes to come at an inconvenient time.
- After the showing, the buyer’s agent will call your agent with the results of the showing, and any comments from the buyer’s, usually within 24 hours of the showing. Your agent will then call you with the update.
- It is important, if at all possible, “not” to be home for the showing. The buyers feel much more comfortable viewing your home with their agent when you are not there. They will stay longer, ask more questions, and view the home more thoroughly. This can often increase your chances of receiving an offer from the buyer.
- Your agent will probably request that you put a lock box on your home. The key to your home will be secure in the box, and will be there available for the buyer’s agent to show your property even on short notice.
Dealing with offers
So the buyer has fallen in love with your home and has made an offer! Your agent will call to make an appointed to meet with you and review the offer. The real estate agent will carefully review each clause with you to make sure you are happy with the conditions of the offer. If there are clauses which concern you, or there are changes to be made, your agent will prepare a counter offer for the buyer, outlining the changes you would like to make. Then the ball is in the buyer’s court to decide if they are willing to accept your new conditions. This process could play out a couple of times until both parties are happy with the conditions of the agreement. When an agreement is made and both parties consent and have signed the agreement, we are good to go! The agreement will then be sent to the lawyers representing the buyers and the sellers. Both parties must then complete the terms of the agreement within the specified times on the agreement. If a party defaults on a term of the agreement, they risk termination of the agreement, and in some instances legal action.
Once all conditions on the Agreement of Purchase and Sale have been satisfied both parties then look forward to the Closing day. There will be a closing inspection of the property by the buyers, usually fairly early the morning of the closing day, just to make sure the property is as they expected it to be, and that no damage has occurred prior to the closing day. The buyer will also verify that all fixtures and chattels which were to remain at closing are present at the property. The buyer will then advise his lawyer that all is Ok with the closing inspection, and to go ahead and forward the funds for the closing. Once the seller’s lawyer has received the funds from the buyer’s lawyer, and the appropriate paperwork changes hands, the sale will be complete and the property sale will go through.