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
* The seller's agent is a member of a real estate board (the
Board) which operates a multiple listing service (MLSTM
enables 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
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
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.
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
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
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
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
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
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