Real Estate Terms Canada - Jargon Explained Jargon in the real estate industry in Canada…
In Episode 9 of How to Sell Your Condo in Vancouver, we discussed marketing strategies to sell a condo in Vancouver.
Once we have a good plan of action to sell a condo, its time to talk about the Multiple Listing Contract and get started with the marketing of the property.
In this post we will explain what a MLS listing contract is, is not, and some of the important features of the document.
What is a Real Estate Listing Contract?
There are two types of listing contracts that are most commonly used to sell properties in Vancouver and British Columbia. The first are exclusive listing contracts and the second are multiple listing contracts. In this post, we will be discussing multiple listing contracts as opposed to exclusive listing contracts.
A real estate listing contract is a legal agreement for a specific period of time between a Seller of a property and a Realtor and their Brokerage (In my case, Oakwyn Realty Downtown LTD.) for the Real Estate Agent to market and promote the property and bring written offers on the property to the Seller. Please see an example of an REBGV Listing Contract below.
The Sellers Agent in this situation is often referred to as the Listing Agent.
The listing agent is the Realtor that a seller hires with this listing contract (see below) to market the property, post the property on the MLS system, and to bring the sellers offers that the seller can accept or refuse.
What is a Multiple Listing (MLS) Contract for Sellers?
An MLS listing contract is the foundation of the Multiple Listing System (which underpins Realtor.ca) and are the most widely used documents to sell properties in Canada.
The Multiple Listing System (MLS) allows real estate boards to share information about multiple real estate listings for properties (as opposed to Exclusive Listings were information is not shared on MLS) among the paying members (licensed Realtors) and the general public via Realtor.ca.
The MLS Listing Contract is what gets a real estate listing up on Realtor.ca and other sites that share listing data.
The MLS system also shares information about buyers agent commission that a sellers agent would potentially pay a buyers agent. The MLS system ensures that if a buyers agent brings their buyer to a property subject to a multiple listing contract and that buyer purchases the property, the buyers agent will be paid by the sellers agent. This is in contrast to an exclusive listing were a seller only pays the sellers/listing agent and does not offer commission to a buyers agent.
You Hire a Realtor to Sell Your Home On MLS with a Listing Contract
Aside from the aspects above, think of the listing contract as the employment contract for the real estate agent a seller hires to sell their property. The listing contract sets out how long the listing agent will have the exclusive right to bring the seller offers as their sellers agent.
Please note – for my clients, I will always end a listing contract early upon demand if a client is unhappy.
We offer this service as we are confident we can keep our clients happy by doing a good job and have never had to end a listing contract early.
Listing Price is Set in the MLS Listing Contract.
The listing contract in Section 3 sets out the sellers asking price for the property and any other terms and conditions a seller may want to add to the selling process.
Important Things To Know About the Listing Contract
- Specifies the List Price the property will be marketed at.
- Expires on a Specific Date. (Section 1A) The minimum time to get a property on MLS is a 60 day listing. You cannot get a property listed on MLS with less than a 60 day listing.
- The Listing agent must obey all lawful instructions of the seller as per the Disclosure of Representation in Trading Services that all Buyers and Sellers must sign when working with a Real Estate Agent in British Columbia.
- The Listing Contract is the main document to get the property onto the MLS.
- The Schedule A lists the services a Seller should expect to receive under the contract from the Realtor and their Brokerage.
What is the Commission Paid on a Listing Contract?
If and when the property sells, the listing contract specifies the commission payable to the Listing Agent as well as commission the Buyers Agent will receive. (Section 5)
According to the federal Competition Act, there is no set or standard commission for real estate transactions in Canada.
As licensed realtors it is illegal for us to say there is a standard rate of commission, but we can discuss what we charge sellers to sell a property,
We charge a seller 7% on the 1st $100,000 and 2.5% of the balance. Please see this handy commission calculator to make it easier to figure how much commission will cost.
In our example contract you can see in Section 5C of the sample contract below, the buyers agent will be paid 3.125% of the first $100,000 and 1.1625% of the balance in the event the buyers agents clients purchase the property.
Please note this commission comes out of the 7% on the 1st $100,000 and 2.5% on the balance in Section 5A of the Listing Contract that would be paid to the sellers agent in the event of a sale.
Furthermore, the buyers agent commission is NOT paid on top of the amount paid to the sellers agent.
Are Realtor Commissions on a Listing Contract Negotiable?
When a seller signs a listing contract in section 5 of the example contract below, that sets the commission payable when the property sells.
According to the Competition Act, we Realtors are required to say real estate commissions are negotiable.
How much we are willing to negotiate is up to us.
My job is to negotiate top dollar for my clients.
If I can’t negotiate my full pay cheque, would you hire me to represent you in the sale of your property?
Here is a post on negotiating real estate commissions.
Does a Listing Contract Expire?
MLS listing contracts are for a set amount of time that is set out in the example below in Section 1a which set as May 31, 2018.
An MLS listing expires when the property has not sold before the end date set out in the contract.
When an MLS listing contract expires, the listing will come off of Realtor.ca and on the Realtor version of MLS the listing will be marked as “Expired”.
Can a Listing Contract be Terminated?
An MLS contract does not lay out how to end the contract early. Realtors are not allowed to coach people on how to end an MLS Listing Contract.
Typically, an MLS listing contract cannot be ended by the client before the expiration date of the contract (confirm with a lawyer).
We operate on the basis that we want happy clients.
If a client is not happy with our services when listing a property, our clients can terminate the listing contract at any time.
What a Listing Contract is NOT!
- An agreement were a Seller is obligated or required to accept an offer brought by the Listing Agent.
- An agreement the Seller cannot end at any time.
- An agreement a Seller is required to extend once it expires.
Other Documents Filled Out & Signed with the Listing Contract
When a Seller signs a Listing Contract with a Real Estate Agent in BC, there is a required package of related documents that are signed and filled out which are:
- A Disclosure of Representation in Trading Services (DORTS) Brochure which a Seller must sign to ensure the Seller and Realtor have discussed the Agency Relationship
- A FINTRAC which is a document that discloses the identity of the Seller to the federal government as part their campaign to stop terrorist financing and money laundering.
- A Privacy & Consent Form that allows a seller to confirm how their personal information will be collected and handled.
- A Property Condition Disclosure Statement which a Seller uses to disclose all the issues a Seller may know or not know about a property.
Important Tips when Signing any Real Estate Related Contract
- Always READ everything on any document you sign. You should always be given enough time to read the document and ask questions.
- If you don’t understand something on a document you are asked to sign, ASK your Realtor.
- ALWAYS consult a Lawyer if you are not comfortable with any aspect of a real estate related contract or want a second opinion after consulting with your Realtor.
If you have any questions about how to sell a property here in Vancouver or the REBGV listing contract feel free to contact me at any time.
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