Show
Whether you are a prospective real estate agent learning the ropes of the real estate business or a prospective homeowner looking to hire an agent or broker, understanding some of the industry jargon is essential. Not only will it keep you informed throughout the process, but it will also help you understand your options, no matter what side of the transaction you are on. One of the core operations of real estate is listing a property. But what does that really mean? A listing agreement is “a legally-binding contract that creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.” In other words, a listing agreement is an employment contract between a client and a broker that spells out what the broker is responsible for in the real estate transaction and how the client will compensate them. Breaking this agreement can have legal consequences for either the broker or the client depending on who breaks what part of the agreement. However, listing agreements must be in writing in order to be enforceable. The Four Common Types of ListingsThere are four common types of listings: open listings, exclusive right to sell listings, exclusive agency listings, and net listings. Open ListingAn open listing is a non-exclusive contract. This type of listing gives the seller or buyer the right to engage any number of brokers as agents. With an open listing, all contracted brokers can market the property or search for property at the same time, but only the broker who brings the ready, willing and able buyer to the seller, or who find the desired property for a buyer, will receive a commission. However, if the client ends up buying or selling property by him or herself, they don’t have to pay any commission to the broker. For this reason, open listings are rare since they offer the least assurance that the broker will receive compensation for his or her efforts.
Exclusive Right to Sell ListingAn exclusive right to sell listing is the most widely-used listing agreement. Under this agreement, the broker has the exclusive right to market the property for a specified period of time. If the property sells while the broker has the listing, the seller must pay the agreed-upon commission regardless of who actually procured the buyer. This limits any conflict with the seller over who was responsible for procuring the buyer. Exclusive Agency ListingAn exclusive agency listing agreement gives a broker the right to market and sell a property for a specified time period, while the owner retains the right to find a buyer and sell the property without owing the broker a commission. The seller must pay a commission only if the home is sold by the broker or an authorized agent or subagent of the broker. This type of listing is not very common in residential transactions because it increases the chances of a dispute between the broker and the seller over who was actually the procuring cause of the sale. Net ListingA net listing is technically not a type of listing agreement at all. In a net listing, an owner sets a minimum amount that he or she wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum. While in this type of situation the seller is getting what he or she wants for the sale, it creates a conflict of interest for the broker by violating the broker’s fiduciary responsibility of putting the client’s interests above his or her own. For this reason, net listings are generally viewed as unprofessional and are illegal in many states.  A real estate broker or salesperson must tell you who he or she represents in a prospective transaction. This disclosure of the relationship the agent has with you or another party must be made in writing at the time of your first personal meeting to discuss a specific property or properties. If you engage the services of a listing
broker to sell your property, you become the broker's client. That broker represents you, the seller, and owes you undivided loyalty, confidentiality and accountability. In negotiating for the best price and terms, he must put your interests first. You may engage the services of a broker to represent you exclusively as a buyer of real property. In this case, the broker represents you and is accountable to you. She must obey your instructions and keep confidential
anything you tell her that may affect your purchase of real property. In negotiating for the best prices and terms, she must put your interests first. A broker can work for both the buyer and the seller on the same property provided the broker gets the consent of both parties and provides each with a written notice of the relationship. In this case, the broker is considered a "disclosed dual agent." This broker owes both the seller and buyer a duty to deal with
them fairly and honestly. In this type of agency relationship, the broker does not represent either the seller or the buyer exclusively, and neither party can expect the broker's undivided loyalty. Undisclosed dual agency by a broker is illegal. When a real estate agent works as a facilitator that agent assists the seller and buyer in reaching an agreement but does not represent either the seller or buyer in the transaction. The facilitator and the broker with whom the
facilitator is affiliated owe the seller and buyer a duty to present each property honestly and accurately by disclosing known material defects about the property and owe a duty to account for funds. Unless otherwise agreed, the facilitator has no duty to keep information received from a seller or buyer confidential. The role of facilitator applies only to the seller and buyer in the particular property transaction involving the seller and buyer. Should the seller and buyer expressly agree a
facilitator relationship can be changed to become an exclusive agency relationship with either the seller or the buyer. Only licensed real estate brokers and salespersons can assist you with the purchase, sale, lease or exchange of real property. The license must be current and in an Active status. This assistance includes a number of services, such as examining property for basic valuations (not to be confused with the services of a licensed appraiser), negotiating purchase, sale or lease agreements, maintaining escrow accounts, and advertising. To become licensed, an applicant must satisfactorily complete the agent curriculum in real estate approved by the Board and pass a written examination conducted by the Board's testing service. A real estate broker negotiates agreements to sell, exchange, purchase, rent or lease interests in real property for a fee, commission or other valuable consideration for another person. A broker is responsible for accepting and escrowing all funds, such as a deposit placed on the purchase of a home, and for finalizing transactions. A real estate broker must supervise any transactions conducted by a salesperson. A real estate salesperson engages in the same activities as a broker, except completing the negotiation of any agreement or transaction. A salesperson also has no authority or control over escrow funds. A salesperson must be affiliated with a broker, either as an employee or as an independent contractor, and work under the supervision of the broker. A salesperson can not operate his own real estate business. Things Buyers Should Know when Dealing with a Real Estate Agent
DepositsBoth parties need to be clear about who will hold any deposit funds and what will happen in the event of a dispute between the parties. All agreements should be in writing, and no party should sign an agreement or pay any money until they are comfortable that they understand the terms. If a broker accepts money from you for any reason, that broker must deposit the payment in an escrow account, a bank account which is maintained specifically as a depository for funds belonging to others, in a timely manner. The money must be kept in the escrow account until the transaction is successfully completed or is terminated. It is illegal for a broker to mingle your funds with his own. If a salesperson accepts your payment or deposit, the salesperson must turn over this money to the broker with whom she or he is affiliated.
Purchase and Sale AgreementA Purchase and Sale Agreement is the contract between the buyer and seller noting the terms concerning the purchase of the house (real property). Essentially, it controls the sale of the home from seller to buyer. It includes information on what is being sold, the sale price, your financing, the type of title you will get, the closing date, the amount of deposit you have paid over and how much of the house price you are financing. Typical negotiable items include:The amount of the deposit, the closing date, the number of loan applications you will file and the main terms of such loan (e.g., that your are trying for a fixed rate loan that does not exceed a specific percentage and number of years). You may also rid the agreement of deposit dispute clauses or include one more favorable to you as the buyer should the sale fall through. Allow enough time in the purchase and sale agreement to obtain financing. The purchase and sale agreement should also specify how many applications for financing constitute "good faith." Repeated unsuccessful applications can be costly and time consuming. Investigate "pre-approval" before house hunting so you are clear about financial limitations. If the broker or the seller makes any important promises or representations about the property or what will be included in the sale, those promises must be contained in the purchase and sale agreement. Allow enough time in the purchase and sale agreement to have a professional home inspection performed. Use references from friends, not the seller's broker, to find your own inspector. If you are represented by a buyer broker
Things Sellers Should Know when Dealing with a Real Estate Agent
Listing AgreementOften brokers present sellers with a standard listing agreement (an agreement which contains "standard language"). These agreements are commonly used in the practice. (They are not, however, developed by the Real Estate Board or by state government.) You may negotiate different terms that are acceptable to you and the broker. Typical negotiable items include:How long you will give a broker to sell your real property, the type of advertising which will be done, and the commission you will pay to the broker. Unless your needs demand otherwise, your listing agreement should seek to have your property advertised in as many advertising mediums as possible, thereby giving it greater exposure to more potential buyers. (For example, the Listing Service of private professional associations, local newspapers, newspapers with statewide circulation, or the internet.)
Things Renters Should Know when Dealing with a Real Estate AgentAnyone in the business of finding living accommodations for another for a fee, commission, or other valuable consideration must be licensed as a real estate broker or salesperson.
It is illegal for an apartment listing service to advertise or otherwise represent listings that claim to meet certain specifications when, in fact, they do not, or to state that it has listings meeting certain specifications when it has no such listings. It is also illegal for an apartment listing service to induce you to sign a contract by falsely representing that it has listings that conform to your requirements at the time the contract is executed. Your Responsibility as a ConsumerWhether you are a buyer, a seller, landlord, or a potential tenant, the duties of a real estate broker or salesperson do not relieve you of the responsibility to protect your own interests. If you have questions concerning your particular transaction, pose them to the agent. If you need advice on legal, tax, insurance or other matters, it is your responsibility to consult a professional in those areas. It is illegal for a broker or salesperson to advise you against using the services of an attorney in any real estate transaction. Filing a ComplaintWhile the majority of licensees conduct themselves as true professionals, the Division of Professional Licensure will take action against those who violate the statutes or the Board's rules and regulations. In many cases, complaints are made by dissatisfied consumers - but, dissatisfaction alone is not proof of incompetence or sufficient grounds for disciplinary action. If you have a serious complaint against a real estate broker or salesperson, call or write the Division's Office of Investigations and ask for a
complaint form
What must occur before a broker decides to exercise an option during an option listing?An option listing gives the broker the right to purchase the property that is listed. A broker with an option is acting as a principal as well as an agent. Prior to exercising the option, the seller must be informed of the full amount of the broker's profit and agree to it in writing.
What is an exclusive agency listing?Exclusive Agency Listing: A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker if the property is sold through the efforts of any real estate broker.
What does exclusive listing mean in Ontario?An exclusive listing means your listing won't appear on Realtor.ca right away. Rather, your agent will advertise your home only to a selected pool of buyers for a period of time before opening it up to the full market.
Which best describes an exclusive right to sell listing?Exclusive Right-to-Sell Listing
With this type of listing agreement, one broker is appointed the sole seller's agent and has exclusive authorization to represent the property. The broker receives a commission no matter who sells the property while the listing agreement is in effect.
|
