What is a listing agreement?

A listing agreement is the legal contract between a property seller and a real estate brokerage that gives the broker authority to market and sell the property on the seller's behalf. It sets out the terms of the relationship, including the commission rate, listing period, and the type of listing arrangement.

Ontario brokerages typically offer three main listing types. An exclusive listing grants one brokerage the sole right to sell the property and earn the commission during the agreement term. A multiple listing service (MLS) agreement places the property on the local MLS system, allowing other brokers to cooperate and share the sale while the listing broker retains control. An open listing allows the seller to work with multiple brokers simultaneously, with commission paid only to the broker who finds the buyer.

Listing terms usually run for 90 days, though the period can vary by agreement between seller and broker. The contract specifies the asking price, marketing obligations, the broker's commission (typically a percentage of the final sale price, split between the listing and selling brokers), and any conditions unique to the property.

For property owners, a listing agreement formalizes expectations and protects both parties. It ensures the broker knows their compensation structure and marketing scope, while the seller understands what services and market exposure they will receive. Choosing the right type of agreement and working with a qualified brokerage are key decisions that affect how a property is marketed and sold.