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IL-Chap 6

Brokerage Agreements

QuestionAnswer
Brokerage Agreements employment contracts for the persona; professional services of the sponsoring broker, not for the transfer of real estate.
Listing Agreement employment contract between a sponsoring broker and seller.
Exclusive right-to-sell listing agreements one authorized broker receives a commission regardless of who sells the property.
Exclusive agency listing one broker is authorized to act as the exclusive agent of the seller-principal. Broker receives a commission only if she is the procuring cause. Seller retain the right to sell without obligation.
Open listing agreement known as a non-exclusive listing, the seller retains the right to employ any number of brokers as agents.
Net Listing provision specifies that the seller will receive a net amount of money from any sale, with the excess going to the listing broker as commission
Option Listing provision that gives the broker the right to purchase the listed property at some point in the future.
In IL any exclusive listing agreement must be in writing and is subject to other legal requirements noted in the IL Real Estate License Act 2000
Multiple listing clause is included in an exclusive listing. It is used by licensees who are members of a multiple listing service (MLS).
MLS is a marketing organization whose members make their listings available for showing and sale through all the other member licensees. The licensee must have written consent of the seller to include the property in an MLS.
Exclusive brokerage agreement should specify a definite period during which the broker is to be employed. There are no automatic extensions Broker protection clause provides property owner will pay the listing broker a commission if someone who saw the property during agreement period purchases the property.
Comparative market analysis (CMA) is an analysis of market activity among comparable properties. Helps seller determine the listing price of the property.
CMA is based on 1. recently sold properties. 2. properties currently on the market (competition for subject property 3. properties that did not sell (expired listings)
Market value is the most probable price a property would bring in an arm's-length transaction under normal conditions on the open market.
Sales price X Commission rate = Commission Commission / Commission rate = Sales price Commission / Sales prices = Commission rate Sales prices X (100% - Commission rate) = net to seller IL requires that agents disclose who interests they legally represent if the other party has no agent.
Following disclosures be included in listing contract: 1.Material facts - are any facts on which a reasonable person would base a contractual decision.; 2.Disclosure of Interest; 3.Disclosure of special compensation;4.Ernest money 5.Property condition. Broker must return a true copy of the listing agreement, signed by the seller and by the broker, to the principal within 24 hours of execution.
Listing Agreements must contain: 1. list price of property; 2. agreed upon amount of commission and time of payment; 3. duration of agreement with definite termination date.; 4. names of broker and seller; 5 signatures of both broker and seller and 6. ID of the property involved; 7. duties of the listing broker; 8. statement of nondiscrimination; and 9. statement regarding antitrust.
Evidence of ownership warranty deed, title insurance policy, or abstract of title with an attorney's opinion can be used for proof of title.
Encumbrances all liens must be paid by the seller or assumed by the buyer.
Minimum Services 1-accept del of & present to client all offers and counteroffers 2-Assist client in devl, com, neg and presenting offers, counteroffers until purch agr is signed 3-answer client's questions relating to offers, counteroffers
Types of Buyer Agency Agreements Exclusive buyer agency agreement Exclusive-agency buyer-agency agreement Open buyer agency agreement
Exclusive buyer agency agreement Also known as exclusive right to represent, this is a true exclusive agency agreement. Buyer is legally bound to compensate broker if buyer purchases a prop described in agreement.
Exclusive-agency buyer agency agreement Same as an exclusive buyer agreement, however, agreement limits the broker's right to payment. Broker can end up educating buyer who can then go and by from a FSBO.
Open Buyer agency agreement a nonexclusive agreement. Allows buyer to enter into similar agreements with unlimited brokers. Buyer compensates only broker who locates property buyer ultimately purchases.
Broker should make the same disclosures to the buyer that broker would make in a listing agreement Compensation is always negotiable.
Buyer's Broker's Services are 1. Needs assessment- evaluate needs of buyer. 2. Property section - locate best property for buyer 3. Viewing properties - provide eval of prop. 4. Negotiate-strategize with buyer to get best price. 5. Follow-up-resolve issues to prevent closing
Created by: Denise Setchel