Selling your House
Completing a Listing Agreement
What is a Listing Agreement?
It is a contract between you and the brokerage company that the agent represents.
It is a framework for subsequent forms and negotiations.
It's important the agreement accurately reflects your property and
clearly spells out the rights and obligations of all parties and what
is included and what is not included in the deal.
What happens?
Both you and the listing agent sign the listing agreement and each receives a copy.
The agreement binds both parties to its terms and conditions.
Whether or not you wish your lawyer to review the agreement, you should
in any case let him or her know that you're selling your home.
The Fine Print
Generally, in the agreement:
- you appoint the brokerage company as your agent and give its representatives the authority to find a purchaser
- the duration of the agreement is indicated
- the compensation is set out (Generally, you pay this only upon closing or when the house changes hands)
The agreement also:
- sets out the listing price
- describes the property you are selling - lot size, building size,
building style and materials, floor areas, heating/cooling systems,
room sizes and descriptions
Here you decide what you are taking with you and what you are leaving
with the house. Generally, unless stated otherwise, fixtures remain
with the property, while chattels -- things which are movable -- aren't
included in the sale. If necessary, what stays and what goes are listed
under "inclusions" or "exclusions."
And finally, the agreement gives the financial details:
- mortgage balance
- monthly payments
- due dates for all mortgages
- annual property taxes
- any easements, rights of way, liens or charges against the property
Types of Listings
Open Listing: The authority to sell the property is given to one or
more REALTORS. You also have the right to sell the house yourself,
without having to pay a fee for service, and without dealing with the
appointed REALTOR(S).
Exclusive Listing: You appoint one firm to act as your agent in the
sale of your house. This firm usually has the sole, irrevocable and
exclusive right to sell your house for a given period of time.
MLS¨ Listing: This is a type of exclusive listing, allowing the
REALTOR to work with other REALTORS through your local board's MLS¨
system and give your property maximum exposure. This type of
cooperative effort may result in the listing agent sharing the
commission with the selling agent.
What is the MLS¨ System?
The MLS¨ system is a cooperative listing service operated by your
local real estate board. Your property --and other properties-- are
listed on it.
How can the MLS¨ System Help Sell My Home?
Complete details of your home are sent to all the REALTORS in your area, usually within 48 hours, via modern technology.
Your property gains more exposure, because it reaches the majority of the real estate professionals in your community.
Through MLS.ca, the national MLS¨ Internet website, participating
local real estate boards can advertise their listings to potential
buyers across the country and around the world.
Setting the Asking Price
Although you may have an idea of how much your house is worth, it's
important to have your home valued by a professional on its own merits.
Be careful not to price yourself too high or too low. If it's too high,
there's no sale; too low and you lose on your investment.
Marketing Your Home
Open Houses
There are two types:
- An agent's open house, where sales representatives from the
listing company will be invited to view your house. If you have signed
an MLS¨ agreement, other REALTORS may also be invited. Remember,
each of these REALTORS may have a prospective buyer.
- A public open house, where members of the public are invited to
walk through your home and have a look. It's an efficient way to show
your home to many potential buyers at once. The listing agent will act
as host, answering any questions.
You and your listing agent will pick the time and date for an open
house. In order to give the agent access to your home, you may wish to
keep a key at his or her office, or in a lockbox. It's a good idea to:
- leave before the open house begins and to return after it ends
- put away any valuables in secure locations
But you may wish to stay behind. If you do stay, be sure to:
- keep out of the way
- don't make excuses -- this only draws attention to the house's faults
- turn off any TVs or radios to let the agent and the buyer talk in peace
- if you have a dog, put it outside or otherwise restrain it... pets intimidate some people
- politely direct to the listing agent anyone wishing to discuss with you terms or price
Needless to say, clean counts with open houses. A general rule is that
clean, uncluttered and well-lit spaces look larger and more attractive.
People will naturally want to buy a house that is clean and well cared
for.
Other Tools
Your agent also has other tools at his or her disposal:
The "For Sale" sign on your front lawn. This is how most buyers find
homes. Your lawn sign is a "silent salesperson," constantly telling
everyone that your home is for sale.
Advertising your home in the real estate section of your local
newspaper or in your local real estate board publication. Even though
your home may not be shown in every issue, you can count on your agent
to always suggest your property to buyers who are looking for a home
like yours.
Renewing the Listing
Sometimes a home doesn't sell right away. Avoid the urge to pull your
home off the market... be persistent! Generally, there are three
reasons why a home may not sell as fast as others:
- location
- condition
- price
Naturally, you can't change your home's location, but you can fix the
condition of your home and you can, of course, adjust your price.
Throughout the listing process, you need to be constantly comparing
your asking price against those of similar properties in your area. It
may be time to adjust the price of your home.
Review your selling strategy regularly with your listing agent:
Is your house being shown regularly?
Are you receiving the feedback from prospective buyers?
Are you in touch with the marketplace?
Is your property competing well? If not, what else can you do?
The Offer
The offer outlines:
- how much the buyer is willing to pay;
- when the buyer would like to take possession;
- any conditions attached to the offer; and,
- when the offer expires.
As an act of good faith, the buyer will make a deposit with the offer. A good deposit will often show the buyer's sincerity.
Along with this, the buyer may:
- attempt to "low ball" you, and submit an offer much lower than your asking price
- attach conditions to the offer
You don't have to accept the offer. You may wish to make a counter
offer that comes partway to meeting the offer's conditions. The counter
offer is one more step along the way to negotiating the final terms and
conditions of the sale.
The offer, once signed by everyone, is a binding contract. Make sure
you understand and agree to all of the terms in the document. You may
want to have it reviewed by your lawyer before signing.
Before Closing
If necessary, and if the buyer makes it a condition of sale, you may be asked to:
- provide a current survey, or a "real property report," showing
the location of the house is on the property owned by you and that
there are no encroachments
- prove that you have title to the property (the buyer's lawyer will
check this out when he or she conducts a title search to see if there
are any liens on the property, easements, rights of way or height
restrictions)
- provide a health inspection certificate, if there is a septic system, stating the system meets local standards
The buyer may also make the purchase conditional on an inspection by a
qualified engineer. You may be asked by the buyer to cover this cost.
Closing the Sale
On or before closing day, this is what happens:
- the lawyers representing you and the buyer will set up a trust
account for the money coming from the sale and will pay off any
mortgages you owe on the property. After these are paid, you will
receive any money you have coming from the sale
- you must deliver the property deed or transfer documents, mortgage
details and keys to your lawyer. Your lawyer will register the mortgage
discharge and transfer the deed at closing
- your lawyer will ensure that you receive compensation for prepaid
expenses such as, property taxes, electrical or gas bills, or if
applicable, any heating oil left in your tank
Some lenders will make it possible for your mortgage to be portable, so
you can take your mortgage with you when you move to your new home.
Finally, two things to remember:
- the capital gain from selling your home is tax exempt. This means the profits from selling your home are not taxable.
- protect your investment and the deal by keeping your insurance policies in force up until the date of closing.
Here, your responsibilities under the listing agreement end. You'll
have paid your listing agent the agreed-upon compensation. This can be
done by your lawyer who can arrange the payment from the proceeds of
the sale.
Source: The Canadian Real Estate Association
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