Once you’ve made the decision to sell your property, one of the first and most critical steps is to hire a professional real estate brokerage to represent your interests. This formal relationship is initiated and governed by a foundational legal document: the Listing Agreement. It is the contract that gives a brokerage the authority to market and sell your home on your behalf.

Understanding this agreement is essential for any seller in Ontario. It is a binding contract that clearly outlines the services you will receive, the fees you will pay, and the obligations you have as a seller. This guide will break down the key components of a standard Ontario listing agreement, so you can move forward in the selling process with clarity and confidence.

What is a Listing Agreement?

A listing agreement is a legally binding contract between you, the property owner, and a real estate brokerage. It details the terms of your professional relationship, granting the brokerage the exclusive right to act as your agent for a specified period to sell your property. In Ontario, there are two primary types of listing agreements:

  1. MLS® Listing Agreement (OREA Form 200): This is by far the most common type of agreement. It authorizes your brokerage to list your property on the local real estate board’s Multiple Listing Service (MLS®). The MLS is a massive co-operative database of property listings that allows thousands of other real estate agents, representing their own pool of buyers, to see your property and bring potential offers. This provides maximum market exposure for your home.
  2. Exclusive Listing Agreement: This agreement gives the sole authority to sell the property to your chosen brokerage, but it does not get listed on the MLS. This means the sale is handled privately by your agent and their brokerage. While this offers more privacy and control, it dramatically reduces the property’s exposure to the wider market of buyers, which can impact the final sale price and how long it takes to sell.

Deconstructing the Key Clauses

A standard listing agreement contains several critical components that you must understand before signing.

The Term (Duration): This is the length of time the contract is active. The term is negotiable, but common periods in Ontario are 90, 120, or 180 days. This gives the agent sufficient time to market the property effectively.

The Listing Price: This is the publicly advertised price for your home. This price is not set by the agent but by you, the seller, based on their professional advice and detailed market data. Developing the right strategy on how to price your home correctly for the Ontario market is a crucial first step before signing the agreement.

Commission (Remuneration): This clause outlines the total fee you will pay for the real estate services upon the successful sale of your home. It’s important to understand:

  • It’s Negotiable: The total commission is not set by law and is negotiable between you and the brokerage.
  • It’s a Percentage: The fee is typically calculated as a percentage of the final sale price.
  • The Split: This total commission is usually split between the “Listing Brokerage” (your agent’s company) and the “Co-operating Brokerage” (the company that represents the successful buyer). This split provides a crucial incentive for other agents to show your property to their clients.

The Holdover Clause: This is one of the most important yet often misunderstood clauses. The holdover clause protects the brokerage’s commission for a specified period after the listing agreement expires (e.g., 60 or 90 days). It states that if you sell your home during this holdover period to a buyer who was introduced to your property during the listing period, you are still obligated to pay the commission. This prevents a scenario where a buyer and seller might wait for the listing to expire to make a private deal and circumvent the commission payment.

Your Obligations as a Seller

The listing agreement also outlines your responsibilities. You are warranting that you have the authority to sell the property and are agreeing to:

Before You Sign

  • Read Everything: Take the time to read the entire document. It is a legally binding contract.
  • Ask Questions: Don’t hesitate to ask your real estate agent to clarify any part you don’t understand, especially the commission structure and the holdover clause.
  • Understand Cancellation: A listing agreement is a binding contract for a specified term. Terminating it early is not always possible and may depend on the brokerage’s policies and the specific terms of your agreement. Discuss this with your agent before signing.

The listing agreement is the official starting pistol for the professional process of selling your home. It formalizes your partnership with your brokerage and sets clear expectations for all parties involved. A thorough understanding of this document is the first step toward a successful sale, paving the way for effective marketing strategies like home staging and expertly handling multiple offers.