A real estate commission agreement is a legally binding document that outlines the terms and conditions of the agreement between a real estate agent and their client. This agreement is essential as it determines how much commission a real estate agent will earn after successfully closing a deal.
As a real estate agent, it is essential to have a commission agreement in place before starting work with a client. This agreement outlines the commission payable to the agent for their services regarding the sale or purchase of a property.
Here is an example of a typical real estate commission agreement.
Parties to the Agreement
The first part of the agreement outlines the parties involved in the contract. This includes the name of the real estate agent and their brokerage firm, and the name of the client.
Scope of Services
The agreement outlines the scope of services that the real estate agent will provide to their client. These services may include marketing the property, conducting open houses, negotiating offers, and managing the closing process.
Commission Percentage and Calculation
The agreement specifies the commission percentage that the real estate agent will receive from the sale or purchase of the property. This commission is typically a percentage of the sale price or purchase price, and the exact percentage can vary depending on the real estate agent and the property.
The agreement will also specify how the commission will be calculated. This may include any applicable taxes and fees. The commission is usually paid at closing, i.e., when the sale of the property is completed.
Exclusivity
The agreement may also include exclusivity clauses, which means that the client cannot work with any other real estate agent during the period of the agreement. This is often a point of negotiation between the real estate agent and the client.
Termination
The agreement may also specify the circumstances under which the agreement can be terminated before the sale or purchase of the property has been completed. This may include breach of contract, mutual agreement, or other factors.
In conclusion, a real estate commission agreement is a vital document for both the real estate agent and their client. It outlines the terms and conditions of the agreement and ensures that all parties are aware of the commission payable to the agent. As a real estate agent, it is essential to have a commission agreement in place before starting work with a client. The above example can serve as a guideline in creating a commission agreement.