1. Chapter 20: The Principal-Broker
Relationship: Employment
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2. LISTING AGREEMENT
An employment contract between the
owner/seller and the real estate broker.
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3. BROKERAGE COMMISSION
An agreed amount of compensation
the owner agrees to pay the broker.
Not set by law.
The amount of the fee is negotiable
between the owner and the broker.
Typical commission fee in the US is 5%
to 7% of the selling price.
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4. LISTING CONTRACT TYPES
1. Exclusive right to sell
2. Exclusive agency
3. Open listing
4. Net listing
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5. 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.
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7. 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.
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8. OPEN LISTING
 There are no exclusive rights.
Whoever sells the property will earn the fee.
 Brokers are reluctant to develop a sales ef fort.
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9. NET LISTING
Owner states the price he wants for
the property and agrees to pay the
broker anything above this amount
as commission.
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10. 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!
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11. EXCLUSIVE AUTHORITY TO PURCHASE
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12. EXCLUSIVE AUTHORITY TO PURCHASE
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(continued)

13. MLS
 A service among REALTOR® members to
of fer compensation to other member
brokers and increase the market
exposure for the listed property.
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14. 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 ef forts
originated the procurement of the sale.
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15. PROCURING CAUSE
the one whose efforts originated
procurement of the sale.
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16. TERMINATING THE AGREEMENT
Mutual agreement
Abandonment
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17. BARGAIN BROKERS
FLAT-FEE BROKERS
DISCOUNT BROKER
VARIABLE RATE COMMISSIONS
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18. Key Terms
 Advance fee listing
 Exclusive authority to
purchase
 Exclusive right to sell
 Multiple listing service
(MLS)
 Net listing
 Ready, willing, and able
buyer
 Real estate listing
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