Looking to sell your house? Check the fine print before signing with a real estate agent

As average home prices across Canada inch lower, there are a few things to look out for in a real estate agreement with a brokerage if you’re looking to sell your home. 
According to Toronto Regional Real Estate Board, GTA realtors reported 5,391 home sales in July 2024, a 3.3 per cent increase from the same period in 2023.
The average selling price was $1,106,617, down by 0.9 per cent from the same time last year. What’s more, experts think the Bank of Canada’s string of rate cuts will stoke demand in the housing market. 
Working with a real estate agent has benefits whether you’re looking to sell or buy.
If you plan to buy, an agent can help secure pre-approval for financing so you know how much you can afford, make inquiries about zoning and permitted property use, and advise you on the best approach in competing offer situations, according to the Real Estate Council of Ontario (RECO). As a seller, real estate agents can help market and advertise your home, vet offers and advise you on market conditions.
There are also things you should pay extra attention to when signing with a brokerage. 
“You should be reviewing (the agreement) in detail to see what you’re signing and retaining the individual and the brokerage for,” says Taimoor Qureshi, senior associate lawyer at Kormans LLP. “But it’s basically proof of what you’re retaining that agent for.”
“The representation agreement should describe the duties that the agent owes you, the services you will get, your rights and responsibilities, what you’re going to pay, how much the commission is, and specific terms of the agreement, including how long it lasts — 30 days, 60 days, 90 days — and whether there are any cancellation rights,” says Bob Aaron, a real estate lawyer at Aaron & Aaron based in Toronto.
For example, if the contract is set for 90 days, Aaron says a seller may want the right to cancel the agreement if the listing doesn’t get action within 30 days or 60 days. As a seller, you will also want to pay attention to the commission owed and see if there’s room for negotiation. 
Look for a clause about a holdover period that allows real estate agents to collect commission even after a listing period expires with the seller.
In Ontario, the holdover period is negotiable and typically lasts two to three months. Other times, this period can last as few as 15 days, says Qureshi. While the holdover period clause generally applies to sellers, there may be implications for buyers, too.
Typically, it’s the seller who pays real estate fees to their agent — but there can be exceptions.
“If the buyer finds a property that came to their attention from the realtor or any of the brokerage’s resources, then they still have to pay a commission to the real estate brokerage that was agreed upon because the property came to their attention as a result of the holdover period.”
Also, pay attention to the radius for the realtor’s services.
“For example, if someone wants to buy property in Mississauga, Brampton or Caledon, that should be highlighted in the (agreement).” 
Lastly, beware that the amount you pay to the brokerage could change if you agree to multiple representation as a seller.
According to RECO, multiple representation happens when a designated representative or brokerage represents more than one client with competing interests within the same transaction.
Aaron also says to pay attention to certain penalty clauses.
“There’s another penalty clause in the Toronto Real Estate Board listing agreement: if the property is sold but doesn’t close, you’re responsible for commission anyway.”