Level 9 NC Real Estate Flashcards
Oral Agreements Are
Okay If:
A broker is representing a buyer or a tenant.
The oral agreement’s terms are clear and
understood by all parties.
The oral agreement does not keep the buyer or tenant from working with
another broker.
The buyer or tenant can terminate the agreement at any time.
The Oral Agreement Must
Be Put into Writing If:
An offer is made by any party in the transaction.
Any attempt is made to obligate the buyer or tenant for a period of time
The agreement seeks to make the broker relationship exclusive.
Oral listing agreements and property
management agreements….
Are unlawful in NC.
Types of Agency Contracts
- Listing contract: A seller employs a broker to sell a property they own.
- Buyer agency contract: A buyer employs a broker to represent them in the
purchase of a property. - Contract to procure tenant: A property owner enlists a broker to find a
tenant for their rental property. - Property management contract: A property owner enlists a broker to find a tenant for their rental property and manage the operations of the rental property.
- Tenant representation contract: A prospective tenant employs a broker
to find a property to rent. (This is more commonly used in commercial
real estate.)
NCREC Rule 21 58A.0104(a)
Per this rule, agency contracts must:
Be in writing.
Have a defined expiration date.
Contain the anti-discriminatory language prescribed by Commission Rule 58A.0104(b)
Be signed by all parties
Include the listing broker’s individual license number
As of October 1, 2011
all agency agreements must be in writing and
signed by the party to be charged in order to be considered valid. In other
words, if you want to be paid for your work as a broker, you must have a
signed written agreement for brokerage services.
A listing broker must do the following to
earn their fee:
Have a current North Carolina real estate
license that is active
Have a valid written listing contract with the seller
Procure a “ready, willing, and able” buyer
When a listing broker takes on a client
as their principal…. (how is commission determined?)
the broker negotiates
how compensation is earned, what form
compensation will take, and who will be eligible for compensation
A buyer’s broker has a similar set of requirements to earn their fee:
Have a current North Carolina real estate license that is active
Have a valid buyer agency contract
Must locate a property that the buyer agrees to purchase
Buyer Broker Compensation..
Often, there is language stating that the broker’s compensation will come
from the…
commission split offered by the seller (as outlined in the MLS).
These are the formulas that can help you solve for different parts of a
commission
Commission amount: Total x Percentage = Part
Commission percentage: Part ÷ Total = Percentage
Sales price: Part ÷ Percentage = Total
independent contractor
works according to their own methods and is
responsible to their employer only as to
the results of that work. Most brokers are
independent contractors!
For both independent contractors and
employees,
the employer oversees the
individual’s work, since the individual is a licensee. With an independent contractor, though, the how, when, and where of their work is more flexible.
Independent Contractor
vs. Employee
If the worker controls how they accomplish their work, the worker is likely an independent
contractor.
If the employer controls how the worker
accomplishes their work, the worker is likely an employee.
ready, willing, and able buyer
a buyer who is ready and willing to purchase the property and is financially
and legally able to do so
procuring cause
the defining action or actions that brought a buyer or buyers to purchase a property
retainer fee
a non-refundable, specified fee paid by the buyer after entering into an oral or
written buyer agency contract
success fee
a specified amount in the buyer agency contract that the buyer’s broker will
earn upon the closing of the transaction
If commission exceeds success fee amount, success fee isn’t paid.
net listing
an agreement in which the seller names a minimum sales price they will accept
for a property, with any excess paid to the broker as commission
protection period
a limited time frame after an agency agreement ends where an agent can be
owed compensation if certain situations occur
What’s in a Listing
Agreement? Standard Form 101 (NC) 10 things
The price of the property
The amount of commission (usually a percentage of the sales price but
sometimes a flat fee)
How the cooperating broker will be paid
(if applicable)
Date of inception and date of expiration (that is, when the agreement begins and
when it ends)
Name and address of the listing broker
and the seller
Legal description of the property
Fair housing statement
Financial information (i.e. the terms the seller is offering)
Approval for the broker to place signs on the property, install a lockbox, post the
listing on the MLS, etc.
Broker protection clause
What’s NOT in a Listing Agreement?
A valid listing agreement should not have a clause for automatic renewal.
In other words, the listing agreement can’t state that once the agreement
expires, it automatically renews for, say, another two months.
Listing Price
The listing price must be determined before the seller signs the listing
contract. It’s important for the listing agent to note two things:
- Listing Prices Are Set by Sellers
- Listing Price = Initial Asking Price
exclusive agency
an agreement in which the seller has an exclusive relationship with a broker
but retains the right to sell the property to named prospects
