General - Chapter 5 Lesson 1 Flashcards
Brokerage agreement
employment contract that establishes the agency relationship between a client, or principal, and a real estate broker, the agent
contract signed technically between…
implying broker and client (not you)
States require…
in writing + termination date
For sellers…
Listing agreement
For buyers…
Buyer agency agreement
For tenants…
tenant agreement
For property owners…
property management agreement
listing agreement
states broker earns commission for finding (or attempting to find) a buyer for seller’s property
Type of listing: exclusive right to sell
to listing broker no matter who sells
Type of listing: exclusive agency
to listing broker unless seller sells
Type of listing: open listing
only to broker who sells property (broker that “wins” known as procuring cause)
Type of listing: net listing
Method of compensation (illegal, strongly discouraged, or rarely used in many states)
Buyer agency agreement
contract between a buyer and a real estate broker
Type of BAC: exclusive buyer agency
to broker no matter who finds property
Type of BAC: Exclusive Agency Buyer Agency
To broker only if they find property
Type of BAC: Open buyer agency
only to broker who finds property
If you have an open listing agreement on a seller’s house, you will earn commission only if you are the procuring cause.
True
Tenant Agreement
written agreement creates agency relationship between broker and tenant. Earning fee, could be exclusive or non-exclusive
Property Management Agreement
written agreement that creates agency relationship between landlord/property owner and property manager, Critical component - detailed description of property manager’s authority
A client may be able to cancel a brokerage contract without risk of damages if the termination is…
for cause
Commission
primary source of compensation
terms of commission should be…
clearly spelled out in writing
Violation of antitrust laws to…
suggest that there is a uniform commission rate (price-fixing)
You shouldn’t just cover the amount of commission but the…
timing
traditionally a listing broker is entitled to commission when…
a ready, willing, and able buyer is found
Ready and Willing
makes offer that meets the terms established
able
have financial ability to complete the purchase
If a ready willing and able buyer is found but sale does not close…
broker has still earned their commission
broker protection clause
states the listing broker is entitled to commission if property sells within a certain period after the agreement expires “… to whom the broker has exposed the property.”
if client refuses to pay
breach of contract and broker has right to file a civil lawsuit, but most brokerage agreements include a clause requiring the parties to attempt to negotiate or participate in mediation
Mediation
Neutral third party helps broker and client talk, doesn’t always prevent lawsuit
Arbitration
more formal dispute resolution option, arbitrator’s decision is final and legally enforcable
Procuring cause
involves an unbroken chain of events
