Real Estate Broker Contract

What is a real estate broker contract?

A real estate broker contract is a legally binding agreement between a property owner and a licensed real estate broker regarding the sale of certain property. The present template would be suitable to facilitate sale-purchase transactions of various types of real estate, including apartments, houses, offices, land, parking plots, vacation homes, etc. A real estate broker contract with a property’s seller is being widely referred to as a listing agreement template.

The document template outlines the property description, the parties’ mutual rights and obligations, and termination rules to make sure cooperation between the parties is clear and professional.

It is important to know that this template does not replace the sale-purchase agreement of real estate property. A broker agreement real estate is a legal tool for cooperation between a client and a realtor to speed up the sale of certain real estate objects.

The parties involved in a listing agreement template are a client and a realtor. A client could be an individual or business that owns a property that is being sold. A realtor or real estate agency is a professional assistant in the market of real estate who can guide from A to Z, including closing the deal.

Having a solid real estate broker contract with the seller could be helpful for:

• real estate brokers and professional real estate agencies
• homeowners who want to hire a professional realtor
• property managers and real estate investors.

What are key features of this real estate broker contract template?

As a rule of thumb, a simple contract between broker and property seller must cover:

• List of real estate broker duties. This list should reflect for which particular work a realtor has a right to get their commission. For example, he or she could be responsible for posting a sale ad in the local newspaper, communicating with potential buyers, etc. Failure to perform duties is a material breach of a contract, which could result in its immediate termination.
• Commission structure. Every real estate listing agreement template must define how much, when, and how a realtor should be paid. There is not unified approach regarding the fee structure, thus parties are free to choose any option (e.g., a fixed fee, hourly rate, a fixed percentage from the sale price). It is also crucial to address if a client shall cover any additional expenses, including fuel, transportation, meal etc.
• Realtor’s legal status. The present contract is being widely referred to as a real estate broker independent contract agreement. It is so because a realtor or real estate agency acts as an independent contractor under this agreement. In fact, a realtor is a service provider, while a client orders professional real estate agency services and pays for them.
• Ground for non-payment. One of the key elements for every agent agreement real estate is grounds for non-payment. The list of such grounds could include 1) when a seller refuses to sell the property; 2) when a seller does not agree to the offer that is less than a property’s listing price; and 3) when a seller enters a transaction with a third party other than one introduced by a realtor.
• Termination. Both parties should have the right to end the contract anytime. Thus, even a simple contract between broker and property seller shall stipulate a notice period for early termination. The contract should end automatically if the property is being sold, removed from the listing, or either of the parties dies.
• Confidentiality clause. This is an optional clause parties could include in the text of a contract when there is a need to protect a client’s confidential information. Having such a clause is particularly important for expensive or luxury property or property belonging to famous people. If the parties wish so, they may also enter a separate non-disclosure agreement.

Why do you need a written real estate broker agreement?

Not all people understand the importance of a legal contract between seller and broker. To some it may appear as unnecessary paperwork, while for others as a waste of time. Here is our top 5 list of the most important benefits a real estate broker agreement could provide you with:

• decreases misunderstanding between the parties;
• clarifies commission obligations, as well as grounds for its non-payment;
• protects both parties’ interests (e.g., a client is prohibited from circumventing a realtor);
• establishes clear goals for a realtor.

How to customize a real estate broker contract at FasterDraft?

To get a fully customized legal document template, follow a few easy steps below:

1. Click the “Create Document” button.
2. Answer simple questions in the form.
3. Select a template’s format—real estate broker contract PDF or Word.
4. Make a payment.
5. Download, print, and sign the document.