When it comes to real estate, most people prefer to think about the fun parts. Looking at prospective homes is an enjoyable way to imagine what your future might look like.

When selling your existing home, you can begin exploring the unlimited possibilities for your next steps. Maybe you’ll upgrade to another home or relocate to a different province or even a new country.

Real estate is where dreams take shape — but as the saying goes, “the devil is in the details.” In this case, those details come in the form of paperwork. Today, we’ll break down everything you need to know about listing agreements.

Do you want to stay current with unique insights into Pickering real estate? Tune into our informative-yet-entertaining podcast right here.

Why You Need a Listing Agreement in Ontario

In simple terms, a listing agreement is the contract between a home seller and their real estate brokerage. A real estate agent needs this signed document to be allowed to sell and market your property.

Without it, they are not permitted to list your house on the MLS®. In fact, under the new Trust in Real Estate Services Act (TRESA), your agent needs a listing agreement to even be able to offer you individualized guidance or advice.

Once you become an official client, your agent, and by extension, the entire brokerage is under a fiduciary duty to represent your best interests. They must do everything within the limits of the law and professional standards to help you reach your goals, such as selling your home for the highest amount the market allows, protecting your safety and identity, and making the transaction as easy and stress-free as possible. They must be loyal to you while maintaining your confidentiality. In addition, they must disclose any pertinent information that might affect your decision to sell your home.

The terms covered will include any Realtor® commissions, the listing price, the duration of the agreement, and a clear description of the services offered. As a written agreement, your contract falls under the jurisdiction of provincial law. TRESA guidelines also require your agent to explain the differences between representation and self-representation, as well as disclose any benefits they receive from the sale of your home, including any referral fees.

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What About the Holdover Clause?

Many sellers are concerned by the holdover clause in a listing agreement. This term causes more worry and anxiety than it needs to. Essentially, it’s there to protect the real estate agent that brings in a potential buyer to the home during the period of the listing.

If, after expiry and during the holdover period, a buyer comes back and finalizes their purchase with the seller during the stated timeframe, the listing agent and buyer agent could be entitled to receive a commission.

Most clauses in a listing agreement are there to protect the seller. This one protects the agents from missing out on compensation that they have rightfully earned.

You don’t need to wait for the holdover period to pass before you can relist your house. And as soon as you have a new listing agreement signed, the holdover period is redundant.

Can You Get Out of a Listing Agreement?

As we mentioned, a listing agreement is a legal contract, which means you can’t terminate it on a whim. However, there will be clauses within the document itself that could allow either party to exit the agreement.

Keep in mind that you are not necessarily obligated to sell your house until you sign and accept an offer. However, if you do sell, you are under contract to work with that listing agent and their brokerage until the expiration date.

If no legitimate cancellation clause exists for your situation, there is always time. Listing agreements come with an expiration date, which typically ranges from 120 -365 days, but at the very minimum must be 60 days.

What happens if there is no expiry date? Contrary to what you might fear, you are not stuck under the contract indefinitely. Under Ontario real estate law, a listing agreement must include an expiry date, otherwise it is considered invalid.

What Happens if Your House Doesn’t Sell?

The listing agreement will expire on the stated date, whether you find a buyer or not. Unfortunately, not every house sells no matter how skilled and experienced your Realtor® may be. Most real estate contracts don’t guarantee a sale, just that the agent takes all reasonable steps to sell the home at fair market value.

If the contract does have a “guarantee of sale”, you might want to take it with a grain of salt. These are often marketing gimmicks, so be sure to read all terms and conditions carefully.

All this means is that the real estate agent agrees to purchase the property themselves if the contract expires before you find a buyer. Technically, Ontario law does allow this, but this type of clause often comes with many disclaimers and conditions. Plus, the typical price is approximately 10% below fair market value.

The good news is that whatever path you choose, your agent and their brokerage are bound to the TRESA rules of disclosure, loyalty, and representation.

If you plan to sell your home this year, the posts below will help set you up for a successful and streamlined transaction:

• What Not to Fix or Renovate Before Selling a House
• Is Staging the Ultimate Home Selling Secret?
• How to Make Your House Appeal to the Next Generation

What Is an Exclusive Listing Agreement?

An exclusive listing agreement means that the home is not listed on the MLS® right away (and sometimes never). The real estate agent can find a buyer at any time during the pre-listing stages. This arrangement gives you time to fully prepare the home for maximum impact in the market without limiting your chances to sell earlier.

Often, a real estate agent with a wide network of other agents can introduce a buyer without your neighbour ever knowing your home was on the market. However, the rules for exclusive listing agreements is different under the Trust in Real Estate Act introduced in 2023.

The new guidelines state that your agent must list your property on the MLS® within three days of marketing. If the exclusive period ends without a sale, this gives you the opportunity to maximize your exposure by advertising your home to a larger pool of potential buyers.

Whether you choose a traditional or an exclusive listing agreement, understanding your contract and your rights is one of the first steps to a successful outcome.

Do you have more questions about listing agreements or want to talk about a strategy for selling your home? Our Pickering real estate agents are happy to help you make the most of your sale. Reach out today at info@teamrajpal.com or call 647-875-8000 to get started.

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