Seller’s Guide – Step 2

Your Agent

Working with a Real Estate Licensee

You can sell your own home without the services of a real estate licensee, but selling a home is a complex process.

  • What is the best possible price?
  • Where do you find a buyer?
  • What facts must you disclose?
  • What paperwork is required?
  • Will the contract be legal and binding?
  • How is ownership transferred?
  • What about the existing mortgage?
  • Can the buyer qualify for a mortgage?
  • Who ensures you will get your money?

To handle these problems and many other situations which may arise, you might wish to employ a licensed real estate professional to act as your agent.

Licensing Requirement

It is important to understand that in British Columbia, the person you hire to assist you to sell your home must be licensed under the provincial Real Estate Services Act.

Professional Standards and FAQs

Responsibilities of seller’s and buyer’s licensees

In every real estate transaction there is a seller and a buyer. A real estate licensee may be employed as an agent for the seller, as an agent for the buyer, or both. Early in the first meeting with a real estate licensee, the licensee should provide you with full disclosure about the nature of his or her relationship with you, as a seller, and any relationship he or she may have with a buyer. The licensee is required by law to provide this information and explain its implications to you.

Your relationship with a Real Estate Licensee

Real estate licensees work within a legal relationship called agency. The agency relationship exists between you, the principal, and the brokerage, the company under which the individual licensee who is representing you, is licensed. The essence of the agency relationship is that the brokerage has the authority to represent the principal in dealings with others.

Agency

There are three possible models you can use to buy, sell or lease property though a REALTOR®

Designated Agency

When a brokerage designates a REALTOR® or REALTORS® to work solely on your behalf in real estate transactions, the REALTOR® and brokerage are bound by ethics and the law to be honest and thorough in representing you. The brokerage must account for all money and property placed in its hands while acting for you. The REALTOR® must:

  • Provide undivided loyalty to you (Client) by protecting your negotiating position at all times, and disclose to you all known facts which may affect or influence your decisions;
  • Obey all lawful instructions which you give the REALTOR® to act on your behalf;
  • Maintain the confidentiality of your information (financial, legal, personal, etc.) (See following PRIVACY section);
  • Use reasonable care and skill in performing all assigned duties in the role as agent.

Limited Dual Agency

Limited Dual Agency occurs when the Designated Agent represents both the buyer/tenant and seller/landlord in the same transaction or two buyers competing for the same property. In this arrangement, the REALTOR® cannot be concerned exclusively with your interests in the transaction, since they are acting on behalf of the other party as well. Both the seller and the buyer or the competing buyers should fully consent to a limited dual agency arrangement in writing.

A REALTOR® who has consent to work as a limited dual agent must adhere to the following restrictions:

  1. Deal with both parties impartially;
  2. Have a duty of disclosure to both clients, except that:

I. REALTOR® must not disclose that the buyer/tenant is willing to pay a price or agree to terms other than those contained in the offer, nor disclose that the seller/landlord is willing to accept a price or terms other than those contained in the listing;

II. In the case of competing buyers, the REALTOR® must not disclose the amount or terms of any offer to purchase or lease made or contemplated by either buyer/tenant;

III. REALTOR® must not disclose the motivation of one Client to the other Client, unless one of the Clients has authorized such disclosure themselves;

IV. REALTOR® must not disclose buyer/tenant’s or seller/landlord’s personal information to the other Client, unless authorized in writing. (This refers to information not otherwise disclosed in the transaction documents.

3. Must disclose to the buyer/tenant any defects about the physical condition of the property that are known to the REALTOR®. 

Customer Relationship:

Working With a REALTOR® Who is Not Your Agent

You may also choose to use the services of a REALTOR® without having any kind of agency relationship. This might occur, for example, when you contact or are being shown a property by the seller/landlord’s Designated Agent who will treat you as their customer rather than their client.

In this situation, the REALTOR® is not permitted to recommend or suggest a price, negotiate on your behalf, inform you of their client’s bottom line price point or disclose any confidential information about

their client unless otherwise authorized by the client (or if in special circumstances, the law required it). However, the REALTOR® can provide you with other services, such as:

  • Explaining real estate terms, practices and forms
  • Assist in screening or viewing properties
  • Prepare and present all offers and counter offers at your direction
  • Inform you of lenders and their policies
  • Identify and estimate costs involved in a transaction

You should not provide a licensee who is not your agent with any information that you would not provide directly to his or her principal. Remember, it is possible to enjoy the benefits of a licensee’s knowledge and experience, regardless of whom that licensee is representing.

How do you choose a licensee?

There are many ways to find a real estate licensee with a reputation for excellence. Word-of-mouth is one good  source. Ask friends, neighbours and fellow employees who have recently bought or sold a house to recommend their choice of a licensee. You might meet a licensee you like at an open house who is showing one of the properties for sale in your neighbourhood. Or, you could contact several local real estate brokerages to inquire if they have a licensee who specializes in selling homes similar to yours. The internet is also a good way to locate licensees who specialize in properties and regions that may be of interest to you. Make appointments with licensees to discuss their range of services, background, knowledge, and fees or commission rates. After these interviews, choose the licensee  who seems best able to render the services and produce the results you are seeking.

What will a licensee charge?

In general, licensees work on a commission basis and receive payment only after the successful completion of a sale.  As the seller, you will be asked to agree to pay this commission as a fee for the licensee’s services. The commission is usually stated as a percentage of the total sale price or as a fixed dollar amount. Note that HST is applicable to commissions. The commission rate is neither fixed by law nor by any real estate board; is it negotiable between you and the licensee you engage to help you. The seller’s brokerage traditionally shares this commission/fee with the brokerage working for the buyer.

Listing Contracts

Once you have selected a licensee to work with, that licensee will use market research, along with his or her knowledge and expertise, to assist you in setting the best possible listing price for your home. However, you must keep in mind that the price you set must be attractive to potential buyers under the current market conditions.

Before finalizing the listing price, you may wish to ask your selected licensee to prepare an estimate of the net cash proceeds you will receive on completion of the sale, based on the suggested listing price and the financing arrangements currently in place. After a listing price has been established, you will be asked to sign a Listing Agreement.

Types of Listing Agreements

In British Columbia, the two most common types of listing agreements are:

  • the Exclusive Listing
  • the Multiple Listing

Each type of listing lasts only for the time period which is specified in the agreement. Be sure to take note of what this time period is. An Exclusive Listing gives the seller’s brokerage the sole right to sell the property. This means that even if you sell the property to a prospect of your own during the term of the listing, you must pay the agreed commission to the seller’s brokerage unless that prospect was specifically excluded on the listing agreement.

You should also be aware that even after the exclusive listing expires, you may be obligated to pay the seller’s brokerage a commission if you sell your property to a person who purchases because of the licensee’s actions during the time of the listing.

A Multiple Listing differs from an Exclusive Listing only in that the seller’s brokerage agrees to register your home in a Multiple Listing Service (MLS™) so that its availability is made known to all real estate licensees who are members of the local real estate board.

In this case, the seller’s brokerage agrees to share a specified amount of the commission with any other member of the real estate board who is able to find a buyer for your property. Discuss your objectives with your licensee before deciding which type of Listing Agreement will best suit your needs.

Terms of the Listing Agreement

The Listing Agreement legally defines your arrangement with the brokerage, setting out, at minimum:

  • the price and terms at which you are willing to sell your home
  • the existing financing arrangements and whether this financing can be assumed by a new owner
  • a list of items attached to the building (normally called fixtures) which are not to be included in the sale; for example, a fireplace insert or a crystal chandelier
  • the date on which you can give possession of the home to a new owner
  • the commission payable to the brokerage on the completed sale of your home
  • the time period for which the agreement will be in effect, ending on a specific calendar date
  • It is also advisable to ask your licensee what he or she will do to sell your property, i.e. a marketing plan. If possible, get this in writing.

Agreement

Ensure that all the spaces have been completed to your satisfaction, and you have a thorough understanding of all of the terms it contains, especially the list price, the commission rate, and the length of the contract. The licensee will provide you with a copy of this agreement which you should keep for future reference.

Remember: Be aware that the Listing Agreement is a contract. You cannot simply back out of the contract without the consent of your licensee. If your licensee says that you can cancel the listing agreement at any time, ensure that you get this in writing.

Responsibilities of the seller

When you employ a licensee, you are responsible for providing him or her with accurate information concerning your home; for example, its age, the current financing arrangements, the condition of the roof and hot water heater, the property taxes, etc. You must disclose both the good features and the defects, including the fact that the basement leaks when it rains! Be honest with your licensee.

The licensee will need your assistance and/or authorization to gather information about such things as the ownership details, the outstanding balance owing on the mortgage, the property’s assessed value, and the current zoning of the property.

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