
What types of brokerage agreements are there?
The simple brokerage agreement
The simple brokerage agreement is a loose contract. It is sufficient for it to be concluded verbally. Although it is not limited in time, it can be terminated by the owner at any time. There is no exclusivity with this contract. This means that the seller can also pass on their order to other brokers at the same time. However, this has at least two decisive disadvantages: 1. The broker is not obliged to take any action. 2. Prospective buyers often become skeptical when they find a property listed by several brokers. They wonder if there is something wrong with the property. The property could thus become a slow seller.
The sole brokerage agreement
With an exclusive brokerage agreement, an owner decides to have their property marketed exclusively by a single broker. This has the advantage that property sellers can rely on the full commitment of their broker. For this reason, an individual contract is concluded between the seller and the broker. Another advantage is that the sole agency agreement is concluded for a specific period, usually between three and eight months. For real estate sellers, this means that the duration of the sales process can be calculated in advance. With this type of contract, however, the owner is still free to look for a suitable buyer themselves.
The qualified sole agency agreement
In a qualified sole agency agreement, the seller and the real estate agent agree that the property will be marketed exclusively by the real estate agent. This means that neither the owner nor another real estate agent may market the property. If the owner finds an interested party, they must refer them to their commissioned real estate agent. The term of the qualified exclusive mandate is basically the same as that of the exclusive brokerage agreement. With this option, the buyer can also be sure that the agent will do everything in their power to sell the property. The contractual provisions also mean that the agent has little chance of reneging on the agreement or even putting it on the back burner.
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Legal notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific case clarified by a lawyer and/or tax advisor.
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