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Who's selling your house?

This is the first in a series of columns in which we will look at important aspects of a typical residential real estate transaction. A typical residential real estate transaction * A seller owns a single family residence, duplex or condominium property in an urban area of Alberta (the home). * The seller wants to sell the home and retains the services of a licensed real estate agent (the seller's agent). * The seller and the seller's agent sign a document called a listing contract. * The seller's agent is a member of a real estate board (the Board) which operates a multiple listing service (MLSTM). The MLSTMenables agent/salesperson members of the Board to co-operate with each other in selling real estate by sharing information and by conducting their business according to agreed rules, by-laws, and a code of ethics. * After the home is listed with the MLSTM system, a buyer is found by the seller's agent or another real estate agent who is a member of the Board. * The buyer is shown the home and decides to buy. * The seller and the buyer negotiate and sign a Real Estate Purchase Contract. The agents assist in the process. * The transaction is completed with the assistance of a lawyer or lawyers (i.e. The payment of the sale price and the transfer of the legal title). Now we will look at the real estate agent. 1. In Alberta, we have a new Real Estate Act (the Act) which creates the Real Estate Council of Alberta (RECA). RECA sets and enforces standards of conduct for real estate agents, mortgage brokers, and their businesses. 2. (a) The real estate agent is usually a corporation or other business organization that holds a provincial licence to trade in real estate. The licensing process is administered by RECA. (b) Salespersons are registered provincially and work for licensed real estate agents. RECA also administers the registration process. (c) All persons who trade in real estate take extensive education courses and write examinations before they are allowed to deal with the public. Real estate boards have additional educational requirements. Therefore, the provisions of the Act and the rules, by-laws, and code of ethics of the Board are important when looking at the role of real estate agents and salespersons in the transaction. However, of even greater importance is the listing contract. Listing Contract There is a standard form generally in use in Alberta that was developed jointly by the real estate industry and the provincial government. The consumer should read the listing contract carefully and may talk to a lawyer before signing it. The listing contract spells out the relationship between the seller and the seller's agent. It describes the property to be marketed; the asking sale price; the duties of the seller and the seller's agent. These are important paragraphs: Paragraph 6.1: The real estate commission is described (the fee). Paragraph 6.2: The seller is advised that the seller's agent will be offering a portion of the fee to other real estate agent members of the Board (Note -- this is one of the fundamentals of the Board's MLSTM system. Member agents co-operate to find buyers for listed properties and share in the fees. From the seller's perspective, if the home is sold for a sale price that the seller accepts, then it should not matter that the seller's agent shares the fee with another agent). Paragraph 10.1: The seller's agent agrees to find a buyer and to market the home using the Board's MLSTM system. Paragraph 9.1: If the home is sold during the term of the listing contract (and sometimes longer), then the seller's agent will be paid the fee no matter who actually finds the buyer. For example, even if the seller finds the buyer, the seller's agent will be paid the fee. Therefore, if the seller knows of potential buyers, such as relatives, then those persons may be written out of the listing contract. The agency relationship is a fiduciary relationship and is assigned very high standards and duties. Generally speaking, the fiduciary duties owed by the seller's agent to the seller are these: good faith, obedience, honesty, competence, accountability, full disclosure, and confidentiality. In addition, the seller's agent must avoid situations where its interest may or do conflict with those of the seller. In the next column, we will look at dual agency (when the seller's agent also represents the buyer) and at the buyer's agent.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1997 Gale, Cengage Learning. All rights reserved.

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Author:Connauton, William S.
Publication:LawNow
Date:Aug 1, 1997
Words:760
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