Thursday, November 5, 2009

Selling A Non MLS® Listed Property

The renewed strength we are seeing in our real estate market seemingly brings with it an increase in oddities relative to the traditional listing and sale of properties through the Multiple Listing Service (MLS®)
In the last 2 to 3 weeks I have received calls or emails from consumers seeking some guidance with respect to the sale of their homes which at the time of their contact with me were not actively listed for sale. In these instances, the sellers were asked by the REALTOR® representing the potential buyer to either sign a short-term "Listing Agreement" ie: 4 or 5 days, or to sign what is known as a "Seller Customer Service Agreement." The fundamental purpose of these agreements from the REALTORS® perspective is to ensure they get paid a commission should the house sell.
Having a seller sign a formal "Listing Agreement" for a few days in order to facilitate them showing a property to their buyer client is rather pointless. With all of the conditions typically inserted into today's offers ie: financing, attainment of insurance, completing a home inspection etc. it is highly unlikely that all of those conditions will be satisfied in such a short time frame before the listing expries unless the Listing Agreement is extended. One of the short-term listings in question had an offer accompanying it that was conditional on the buyer selling their present home in a couple of months!
The "Seller Customer Service Agreement" is the more appropriate of the two documents to use when bringing forth a buyer for a property not listed for sale and I have used this form for numerous transactions. This Agreement has dates both for the commencement of the Agreement as well as an expiry of said Agreement. Secondly it stipulates the commission to be paid by the Seller either in terms of a percentage of the sale price or just a set fee.
There is however one alternate means for a REALTOR® to sell a home that is not listed for sale and to be paid for doing so. Have the buyer pay the commission. Most REALTORS® dealing with buyers these days have or should have in place a "Buyer Representation Agreement." This Agreement establishes a formal agency relationship between the REALTOR® and the buyer(s) thus appointing the REALTOR® to act as their agent. As with the "Seller Customer Service Agreement," the "Buyer Representation Agreement" also can facilitate a commission to be paid to the REALTOR® by the buyer for successfully acquiring a property on their behalf. Although used less frequently having a buyer pay the commission removes that burden from the seller whose home is not actively listed by them for sale and this can help in the negotiation process with respect to price.
The bottom line is, it is not necessary for a seller to sign a short-term Listing Agreement in order to have a REALTOR® show their non-listed property to a potential buyer or to bring forth an offer. There are other alternatives that can facilitate an accepted "Agreement of Purchase and Sale" being achieved with the REALTOR® being paid for their efforts.


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Paolo Vernom said...

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Rick relocated to Collingwood from Toronto in 1985 through a transfer with Goodyear Canada. In 1987 Rick was recruited by a major client of Goodyear’s, managing their Canadian business based in Barrie before moving to Chicago in 1992 as Vice President of Sales & Marketing. Upon returning to Canada in 1996, Rick ran an industrial products manufacturing company in Stratford, Ontario. In 1998 Rick returned to Collingwood with his two children. Rick is a licensed real estate Broker with Royal LePAGE Locations North in Collingwood and holds his MVA designation (Market Value Appraiser-Residential). He is an active volunteer in the community serving several years on the Board of Directors with the Collingwood Chamber of Commerce as Treasurer, 6 years on the Board of Directors for the Southern Georgian Bay Association of REALTORS® of which he is the Past President (2008) and currently serves on a committee with the Ontario Real Estate Association. Rick is a diverse executive manager with extensive experience in strategic planning, manufacturing, finance, human resources and quality assurance management.