Understanding Your Listing Agreement: Ontario Edition

You have a lot to think about when selling your house. It begins with the logistics of your transaction, like how much your listing price should be and what renovations to invest in first. It can certainly feel like everything seems to happen all at once! Fortunately, there is a way you can streamline everything and set yourself up for a successful selling experience. Understanding your listing agreement will help make it all possible.

Planning to sell your house in Peterborough or Kawartha Lakes? Knowing its value in today’s market is an excellent place to start. Book your free home evaluation today.

OREA Listing Agreement Explained

What is a listing agreement, exactly? It’s the legal contract between a real estate agent and their client, also known as a Seller Representation Agreement in Ontario. (Stay with us here; the legalese may be boring, but it’s critical to understand what you’re getting into when you sign on the dotted line.)

The Trust in Real Estate Services Act (TRESA) is the legislation that governs all real estate transactions in Ontario. These rules are then enforced by the Real Estate Council of Ontario (RECO). The Ontario Real Estate Association (OREA) creates standardized forms that comply with all guidelines outlined by TRESA.

Only a licensed real estate professional in good standing has access to OREA forms. In theory, you could use a listing agreement you draft separately. However, you and your agent still need to comply with the rules. This leaves room for critical errors, so it’s strongly recommended that you use the standard form to protect all parties.

A legal listing agreement consists of several essential components, including:

The seller’s information and property description
The type of listing, standard or exclusive
A start and end date for the agreement
Commission rate
Holdover period

Do you need a real estate agent to sell your house, and if so, how do you know who to choose? The posts below will give you some insight:

Types of Listing Agreements

A standard MLS® agreement is the most common type of arrangement. Your signature allows your Realtor® and their brokerage to market your property.

The listing goes public, and any real estate brokerage is permitted to bring a buyer. Going this route is usually recommended as it offers the most visibility and exposure for your home. A faster sale and a higher price are often the results.

What Is an Exclusive Listing in Ontario?

Every scenario is different, and some sellers prefer a little more privacy. In some instances, an exclusive listing agreement might be the better option. This means the real estate agent has the exclusive right to bring a buyer. It can also open the door to a conflict of interest and create an unfair market for home buyers, which is why recent guidelines have become more stringent.

Exclusive listing agreements in Ontario are still permitted. Your agent can network with previous clients and within their brokerage to find a buyer. The difference now is that, if your agent publicly markets your home in any way, it must be listed on the MLS® within three days.

An exclusive listing commission structure is also different. Under a standard MLS® listing, any real estate commissions are split between the seller and buyer brokerages. Since an exclusive agreement means one real estate agent represents both the buyer and seller, commissions are not split the same way.

This doesn’t always mean you get a lower rate, however. Many brokerages will double-end the transaction and take the entire amount. That said, it doesn’t hurt to try to negotiate.

Can You Make an Amendment to a Listing Agreement?

What happens if you’ve signed a listing agreement, but then you want to change one or more of the terms? An amendment is possible, but only if all parties are agreeable.

OREA has a form specifically for modifications, called the Amendment to Listing Agreement.

You’ll need your agent to provide the form and ensure all amendments are documented and legally sound. Changing the listing price or the length of the contract are the most common modifications to the agreement.

However, remember that your listing agreement is legally binding. If you wish to change the terms but your agent disagrees, the original contract will stand. Whenever possible, the best time to request any changes is before you sign in the first place.

What Is a Holdover Period in Real Estate?

Imagine if your listing agreement expires, yet you still manage to sell your house shortly afterward. Will you still owe a commission to your real estate agent? It depends on when you accept an offer, who you sell your home to, and the terms outlined in your contract.

Many listing agreements contain a holdover clause, typically for 60-90 days. If you sell within that time to a buyer they introduced to your home, they are entitled to compensation. This clause protects a real estate agent from performing all of the hard work involved in a sale and not getting paid for their efforts.

What Is the Real Estate Commission in Ontario?

This is one of the first questions a homeowner has when deciding on their Realtor®. We can’t give you a precise percentage – real estate commissions are negotiable. The final amount depends on the level of skill and experience a real estate agent has, but it is usually around 5%, with half going to the buyer’s brokerage.

Many real estate services offer different packages, which can affect the rate.

If the Realtor® provides the whole package and takes care of the cleaning, renovations, and staging (often at their own expense), the commission will understandably be higher.
If an agent is more hands-off, you can expect to pay a lower commission.

Instead of focusing on how much you will pay out after your home sells, it helps to understand what you are getting. Working with a full-service or concierge team is generally a more seamless and effortless process, and a higher selling price often occurs. If you end up with more in your account once your sale closes, the actual percentage matters very little.

When it comes to selling your house, our team is ready for anything! Learn more in the posts below:

Can I Change My Realtor® After Signing a Contract?

The cancellation of a listing agreement in Ontario can be complex. Cancellation clauses can be negotiated before you sign, which could give you a valid exit.

If no clause exists, your next step should be a respectful call with your existing Realtor®. Mutual consent is the best option when cancelling an agreement. If both parties agree, OREA has a Cancellation of Listing Agreement form.

If the situation escalates, you could contact a lawyer regarding a breach of contract. This path could be time-consuming. Often, it’s best to let your agreement expire.

Once the end date and holdover period have passed, you are free to move forward in any direction you choose. This could mean not selling your home at all or beginning the search for a new real estate agent who is a better fit for your needs.

Are you ready to list your home? Our Peterborough real estate agents are committed to helping you get results. Reach out to team@jeffandkatie.ca or call 705-243-9797 to start the conversation today.