Real Estate Brokerage Agreements and Compensation

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Vocabulary flashcards covering key terms related to real estate brokerage agreements, agency relationships, and compensation.

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29 Terms

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Brokerage Agreement

An employment contract that establishes the agency relationship between a client and a real estate broker for the purpose of buying, selling, leasing, or managing property.

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Listing Agreement

A written agency contract between a seller and a broker stating the broker will be paid a commission for finding (or attempting to find) a buyer for the seller’s property.

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Exclusive Right to Sell Listing

A listing where the broker earns commission if anyone—including the seller—finds a buyer during the listing term.

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Exclusive Agency Listing

A listing where the broker earns commission only if someone other than the seller procures the buyer during the listing term.

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Open Listing

A non-exclusive listing given to multiple brokers; only the broker who is the procuring cause of the sale earns commission.

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Net Listing

A compensation method in which any sale price above a seller-specified net amount becomes the broker’s commission; illegal or discouraged in many states.

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Multiple Listing Service (MLS)

A cooperative listing service where member brokers share property listings and agree to split commissions on jointly sold properties.

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Buyer Agency Agreement

An employment contract between a buyer and a broker granting the broker the right to represent the buyer and outlining the buyer’s obligation to pay commission.

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Exclusive Buyer Agency Agreement

A buyer contract in which the broker is paid the negotiated fee even if the buyer purchases through another broker or alone.

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Exclusive Agency Buyer Agency Agreement

A buyer contract where the broker is paid only if that broker finds the property the buyer ultimately purchases.

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Non-Exclusive (Open) Buyer Agency Agreement

A buyer contract allowing multiple brokers; commission is earned only by the broker who introduces the buyer to the property purchased.

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Tenant Agreement

A brokerage contract that creates an agency relationship in which a broker finds rental property for a tenant.

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Property Management Agreement

A written agreement detailing the authority, duties, and compensation of a property manager acting for a landlord.

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Fair Housing Statement

Contract clause acknowledging that discrimination based on race, color, religion, national origin, sex, disability, or familial status is prohibited.

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Offer of Cooperation

A statement in a listing or MLS specifying the amount of commission a listing broker will pay a cooperating or buyer’s broker.

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Broker Protection Clause (Extender Clause)

Clause requiring a seller to pay commission if the property sells to a buyer introduced during the listing term, even after the agreement expires.

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Commission

Compensation paid to a broker, typically a percentage of the sales price, negotiated in a written brokerage agreement.

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Commission Split

The percentage breakdown of commission between a broker and affiliated licensee, such as 60/40, stated in an employment agreement.

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Cooperating Broker / Agent

A broker who assists the listing broker in a transaction, often earning a share of the commission for bringing the buyer.

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Procuring Cause

The uninterrupted series of events initiated by an agent that directly results in a real estate sale or lease.

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Referral Fee

Compensation paid from one employing broker to another for directing a client to a real estate agent in that brokerage.

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Dangling Commission

Commission a licensee may receive from a former broker if earned while licensed with that broker and permitted by their agreement.

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Arbitration

A dispute-resolution process where parties submit evidence to an impartial third party instead of going to court.

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Compensation

Valuable consideration given in exchange for performing real estate brokerage services; includes commissions, flat fees, hourly rates, or other payment forms.

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Commission Schedule (Blended Rate)

A negotiated structure where the commission percentage decreases as the sale price increases, producing a blended overall rate.

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Employment Broker

The principal broker who owns all brokerage contracts and compensates affiliated licensees; sometimes called the employing broker.

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Revocation of Brokerage Contract

Action by a client to terminate a brokerage agreement before expiration; may constitute breach and create liability for damages.

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Ready, Willing, and Able Buyer

A buyer who meets all seller terms and can complete the purchase, triggering commission liability to the listing broker.

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Brokerage

A business entity licensed to act as an intermediary between buyers and sellers or landlords and tenants of real estate.