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You’ve found a great real estate agent to help you sell your property. Congratulations! But before you get started, take some time to thoroughly review your service agreement.
A service agreement, also known as a listing agreement, is a legally binding contract between you and the real estate brokerage that your agent is licensed with. When you sign a listing agreement, you agree to work exclusively with that brokerage for a specified length of time to sell your property. Once you are their client, your real estate agent will have a legal duty to act in your best interest.
Before you sign, it is important to review all the terms of the agreement and ask questions about anything that isn’t clear. The real estate agent can explain the terms of the contract. If there is anything that you’re unsure about, it is a good idea to get legal advice before signing the contract.
What’s in a Listing Agreement?
The agreement should specify the property, the sale price, the date the contract takes effect, and the expiry date. Other important pieces of information you will find in the listing agreement include:
- The commission that you agree to pay to the agent’s brokerage;
- The percentage of the commission, if any, that will be shared with a buyers’ agent;
- The circumstances in which you agree to pay the commission; and
- What happens if either you or the brokerage wants to end the agreement before the expiry date.
Don’t Get Taken by Surprise
Didn’t get an offer you liked? Even if you don’t accept any offers, it is possible (although rare) that you could be required to pay the agent the agreed-upon commission. Some listing agreements can stipulate that sellers must pay the commission if a full-price offer has been submitted.
There have also been cases where a seller has been required to pay the commission, although the buyer was not able to complete the transaction and the deal collapsed.
Commissions are not set or approved by BCFSA. They can vary by brokerage and are part of the contractual agreement between you and the brokerage.
Negotiate if Necessary
If you’re not comfortable with the terms of the service agreement, you can usually negotiate on many of the provisions. There may be consequences to changing specific terms and your agent will be able to explain those to you.
For instance, some terms are required before a property can be listed on the MLS® System online database. Should you negotiate a change to one of those terms, the property cannot be posted on the MLS® System, and another marketing strategy may be required.
Taking the time for a thorough review of your service agreement is the best way to ensure that you understand all your agent’s the obligations to you, as well as the obligations that the contract imposes on you. Remember: the contract binds ALL the parties who sign it, not just the real estate agent!
BCFSA’s Practice Standards Advisors are available to answer questions about real estate transactions and the services to expect from a licensed real estate professional. Get in touch with us, at [email protected].
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