© 2012 cengage learning. the principal–broker relationship: employment chapter 19


The Principal–Broker Relationship: Employment

Chapter 19


In This Chapter You will be introduced to employment

relationship between a broker and his principal.


Listing Agreement

An employment contract between the owner/seller and the real estate broker.


Brokerage Commission

The amount of compensation the owner agrees to pay the broker is negotiated between the parties.


1. Exclusive Right to Sell2. Exclusive Agency3. Open Listing4. Net Listing

Listing Types


Real Estate Considerations

Commission Broker protections Owner protections Agency


Exclusive Right to Sell

The listing broker is entitled to a commission no matter who sells the property during the listing period.

This is the most common type of listing.


Exclusive Agency

Similar to the exclusive right to sell except the owner may sell the property himself during the listing period and not owe a fee to the broker.

Broker may be less enthusiastic under this form of listing.


Open Listing

There are no exclusive rights. Whoever sells the property will earn the fee. Brokers are reluctant to develop a sales

effort.


Net Listing

Owner states the price he wants for the property and agrees to pay the broker anything above this amount as commission.


Buyer Representation

Exclusive Authority to Purchase – an agreement where the broker works for the client, the buyer!

Primary responsibility is to the purchaser. Principal is now the Buyer. Buyer Agency!


Multiple Listing Service - MLS A service among REALTOR® members to

offer compensation to other member brokers and increasing the market exposure for the listed property.


Electronic Marketing

The web now dominates the market for both practitioners and individual buyers and sellers.

The web and the Internet have made a huge impact on the way real estate agents handle their business.


Broker Compensation

Commission earned when agreed between owner and broker.

Usually occurs when a “ready, willing and able buyer” is produced.

Procuring cause is the one whose efforts originated the procurement of the sale.


License Act Requirements

Must be duly license real estate broker. Must have written agreement. Agreement must be signed by party charged. Requires licensee advise purchaser in writing

they should get abstract or title policy.


Procuring Cause

The cause originating in a series of events that, without a break in their continuity, results in the accomplishment of the agency objective (closing the transaction).


Terminating the Listing Contract Objective of the contract has been completed Mutual agreement Abandonment Revoking the agency aspect of the listing


Bargain Brokers

Flat-fee brokers Discount broker Variable Rate Commissions


Key Terms Exclusive authority

to purchase Exclusive right to

sell Listing

Multiple listing service (MLS)

Net listing Ready, willing, and

able buyer

© 2012 cengage learning. the principal–broker relationship: employment chapter 19

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