OREA Residential Transactions 4 — Questions and Answers
Question 1: In Ontario, what is the role of the 'listing brokerage' in a residential transaction?
- To represent the buyer exclusively
- To represent the seller, market the property, arrange showings, present offers, and facilitate the transaction on behalf of the seller (Correct answer)
- To appraise the property for the bank
- To conduct the home inspection
Correct answer: To represent the seller, market the property, arrange showings, present offers, and facilitate the transaction on behalf of the seller
The listing brokerage represents the seller under a listing agreement, providing services including property marketing, arranging showings, receiving and presenting offers, negotiating on behalf of the seller, and facilitating the transaction through to closing.
Question 2: What is a 'comparative market analysis' (CMA) in Ontario residential real estate?
- A government assessment of property value
- An analysis prepared by a real estate salesperson comparing the subject property to recently sold, currently listed, and expired listings to estimate a property's market value (Correct answer)
- A bank's mortgage risk assessment
- A statistical analysis of the entire real estate market
Correct answer: An analysis prepared by a real estate salesperson comparing the subject property to recently sold, currently listed, and expired listings to estimate a property's market value
A CMA is a tool used by real estate salespersons to help sellers determine a listing price and buyers determine an offer price. It compares the subject property to similar properties that have recently sold, are currently listed, or were listed but did not sell.
Question 3: In Ontario, what is a 'multiple listing service' (MLS) system?
- A government registry of all properties for sale
- A cooperative database operated by organized real estate where member brokerages share property listings and cooperate in the sale of properties (Correct answer)
- A public website for buying and selling homes
- A list of all licensed real estate agents
Correct answer: A cooperative database operated by organized real estate where member brokerages share property listings and cooperate in the sale of properties
The MLS system is a cooperative marketing tool where participating brokerages share property listings. Listing brokerages agree to cooperate with buyer brokerages and share commission. The MLS provides broad market exposure and standardized property information.
Question 4: What is an 'offer with conditions' (conditional offer) in Ontario residential real estate?
- An offer that has already been accepted
- An offer that includes one or more conditions that must be satisfied before the offer becomes firm and binding (Correct answer)
- An offer with no price stated
- An offer that cannot be changed once submitted
Correct answer: An offer that includes one or more conditions that must be satisfied before the offer becomes firm and binding
A conditional offer includes conditions precedent (such as financing, home inspection, or sale of the buyer's property) that must be satisfied or waived within a specified timeframe. Until conditions are fulfilled or waived, the agreement is not firm and binding.
Question 5: In Ontario, what is a 'Buyer Representation Agreement' (BRA)?
- A purchase contract between buyer and seller
- A written agreement between a buyer and a brokerage that establishes the brokerage as the buyer's representative, including terms of service and commission (Correct answer)
- A financial agreement between the buyer and a lender
- A rental agreement with an option to purchase
Correct answer: A written agreement between a buyer and a brokerage that establishes the brokerage as the buyer's representative, including terms of service and commission
A BRA formalizes the relationship between a buyer and a brokerage. It specifies the type of properties sought, the geographic area, the term of the agreement, the commission or remuneration, and the duties and obligations of both parties.
Question 6: What is a 'listing agreement' in Ontario residential real estate?
- An agreement between two brokerages to share a listing
- A written contract between the seller and a brokerage authorizing the brokerage to market and sell the property under specified terms, including the listing price and commission (Correct answer)
- A rental listing contract
- An agreement between the seller and the buyer
Correct answer: A written contract between the seller and a brokerage authorizing the brokerage to market and sell the property under specified terms, including the listing price and commission
A listing agreement authorizes the brokerage to act as the seller's agent in marketing and selling the property. It specifies the listing price, commission rate, term of the agreement, duties of the brokerage, and obligations of the seller.
OREA Residential Transactions 4
In Ontario, what is the role of the 'listing brokerage' in a residential transaction?