Listing and Buyer Agency Agreements
What the exam tests
This domain tests the formation, content, and termination of listing and buyer agency contracts, including exclusive right to sell, exclusive agency, open listings, and buyer agency agreements. Expect questions about commissions, protection periods, and withdrawal.
Core rules
- Listing and buyer agency agreements must be in writing and signed by the parties to be enforceable.
- An exclusive right to sell entitles the broker to a commission if the property sells during the term, even if the owner finds the buyer; an exclusive agency reserves the owner’s right to sell without commission; an open listing allows the owner to use multiple brokers and pays only the procuring cause.
- Buyer agency agreements should state the term, geographic area, property type, compensation, and whether the broker is exclusive.
- A protection period or holdover clause must be reasonable and limited; it can entitle the broker to compensation for buyers the broker introduced during the term.
- Agency agreements may be terminated by expiration, mutual agreement, revocation, or operation of law; early termination terms should be stated.
Worked example
An owner signs a 90-day exclusive right to sell at 6%. On day 60, the owner sells the property directly to a neighbor for $350,000 without the broker. The broker is entitled to the commission because the exclusive right to sell covers any sale during the term, not only a sale procured by the broker. If the agreement had been an exclusive agency, the owner would owe no commission for a sale the owner procured.
Traps that cost marks
Do not confuse exclusive right to sell with exclusive agency. Do not enforce an oral listing agreement. Do not ignore a holdover clause that extends beyond the listing term. Do not assume a buyer agency agreement is required before showing a home, but do not treat a showing as creating agency.