Everything You Need to Know About Purchase and Sales Contracts

Understanding the Terms of a Listing Contract

The Commission: The commission rate which you will be paying is subject to HST. A percentage of this commission (generally half) is given to the Buyer’s agent. Both listing and selling brokerages are paid out from the whole amount of commission paid. This is how over 90% of transactions are completed. The deposit given to the Listing brokerage by the Buyer, which is held in a trust account, is credited to the commission owed by you as a Seller. You will want to clarify what the “CSO” (commission is going to the Buyer’s agent). If this amount is lower than the normal, which is typically half of the whole rate of commission, your listing could be become boycotted by Buyer’s agents.

The Hold Over Period: It’s not uncommon that a listing agreement between a real estate brokerage and a seller include a “holdover period”. This clause states that the seller is liable to pay the commission to the real estate brokerage should the property sell within ‘x’ number of days after the listing agreement concludes, provided that the buyer was introduced to or saw the property during the listing period. An agent who puts in a lot of time and effort wants to be protected should a buyer decide to make an offer shortly after the listing agreement expires.

Multiple Representation

Scenario #1: When the Buyer and Seller are clients of the same brokerage, it’s known as multiple representation, which is sometimes referred to as dual agency. The term applies even if you are dealing with different representatives who work for the same brokerage.

Scenario #2: Multiple representation can also arise if two buyers are interested in purchasing the same property and they are represented by the same brokerage.

Scenario #3: The Buyer and Seller are represented by the same realtor. It is more common for there to be a multiple representation scenario like #1 or #2.

However if you have Scenario #3 occur you need to make sure your realtor is acting ethically. You can always ask your agent not to be representing both sides. Here are some scenarios to consider:

Marketing & Verification of Information:

You as the Seller allow the listing brokerage and the realtor you have hired to market the property in the way they see best fit. The realtor is allowed to collect information regarding your home including speaking with regulatory authorities, government agencies and mortgagees.

You also need to be honest with your realtor about any known negative issues with the home. You will go over a Data Input for with your agent in detail. Make sure all information is completely accurate prior to making advertising the home for sale.

Referral of Enquiries: You as a Seller agree that during the listing period you are obligated to advise your realtor if any buyers or Buyer’s agent directly contact them with interest in the property. It is best you let your realtor do the talking for you and not show the home yourself.