We engage in brokerage agreements everyday, however many Agents do not fully understand the functionality of such contracts. This post will shed some light on your otherwise dark brokerage engagements.
Before we begin, a shocking fact: many agents have not read the listing and/or buyer agreements. If this is you (or it has been several years since you last read it), then go print a copy and read through it! I am flabergasted at the number of Agents that do not know their tools. A conscientious agent reads all contract forms at least once per year!
1) Your client cannot just "fire" you. Yes, a client may refuse your representation as an agent, and they may engage, through written agreement, another agent to represent them, but they may not just dissolve the brokerage contract with you because they want another agent.
I have heard many, many Agents say, "My broker requires that you sign this buyer agreement, but don't worry, you can cancel it with me at anytime if you want to, without penalty."
WHAT!!??!! -- Then why have them sign the agreement to start with?
If you are in default of the agreement, then yes, your client can dissolve the agreement due to your default and the agreement may be deemed unenforceable. But, if you are doing what is required by the agreement and the client simply decides that they don't like you, or they want another agent, then your client may hire another agent, but that client may still owe you commissions based upon your agreement (listing and buyer agreements).
2) You can write special stipulations into your brokerage agreements. The following are some examples:
Listing Agreements:
-All parties agree that if no offers are accepted, the price of this listing will be reduced every thirty days.
-If Seller requests this listing to be removed or transferred from MLSs during term of this agreement, then Seller will pay Broker $_____ prior to removal or transfer.
Sometimes FSBOs have special requests:
-If Joe Blow or Sally Slander make accepted offer to purchase during term of this agreement, then commission charged to Seller shall be $______.
Buyer Agreements:
-If Buyer contracts to purchase a property within the first thirty days of this agreement, then at the closing, Agent agrees to provide a home warranty by Great Home Warranty, Inc. (not to exceed $345) and reimburse Buyer up to $300 of home inspection costs if Buyer contracts Billy Bob Home Inspector.
-If Buyer contracts to purchase a property after viewing ten or fewer listings, then Agent agrees to provide a home warranty by Great Home Warranty, Inc. (not to exceed $345) and reimburse Buyer up to $300 of home inspection costs if Buyer contracts Billy Bob Home Inspector.
You get the idea. Remember, brokerage agreements are contracts, just like all other contracts. And just like all contracts, brokerage agreements may be written in any way the parties agree.
3) Your brokerage agreement may be entered into now, but not take effect for several weeks (or months). This means that if you and a seller agree to list a property for sale, but the property needs repairs prior to going on the market, you may sign an agreement that begins in the future.
Many agents do not practice this way, and run the risk of the seller meeting another agent between now and the listing date; thereby losing the listing.
This method is a great way to secure the listing, without breaking the law (remember, once the listing period begins, you must hold it out for sale). Plus, the MLSs will penalize an agent with fines for not inputing data within time limits set by the listing agreement.
To do so, simply date the agreement for today (date agreement is made), and date the listing term (date the listing goes into effect) for the dates you and the seller agree to. If the seller needs three weeks to repair the property, then your listing is secure.
The same method may be used in Buyer Agreements. Sometimes a buyer wants to buy a home, but is going on vacation first. Secure the agreement prior to her leaving town, and when she returns, you still have a client.
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