Real Estate Brokerage Agreements and Compensation

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

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.

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.

Exclusive Right to Sell Listing

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

Exclusive Agency Listing

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

Open Listing

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

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.

Multiple Listing Service (MLS)

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

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.

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.

Exclusive Agency Buyer Agency Agreement

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

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.

Tenant Agreement

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

Property Management Agreement

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

Fair Housing Statement

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

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.

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.

Commission

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

Commission Split

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

Cooperating Broker / Agent

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

Procuring Cause

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

Referral Fee

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

Dangling Commission

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

Arbitration

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

Compensation

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

Commission Schedule (Blended Rate)

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

Employment Broker

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

Revocation of Brokerage Contract

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

Ready, Willing, and Able Buyer

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

Brokerage

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