What is a real estate broker?
A real estate broker is a real estate broker who acts as an agent for both the buyer and the seller of the property. In most cases, the seller retains the broker and works with the buyer. The broker works for the seller to solicit potential buyers. The seller then evaluates the proposed offers and determines if an offer is in their best interest. The broker must be licensed by a state regulatory agency.
What is a listing agreement?
A listing agreement is an employment contract between the seller and the broker. The listing agreement generally authorizes the broker to show the property to potential buyers. There are two types of listing agreements:
- Open listing: a broker earns a commission only if the broker successfully sells the real estate; however, if someone else introduces the buyer, the real estate broker is not entitled to a commission.
- Exclusive listing: a broker is entitled to a commission even when someone else sells the property.
When can a broker collect his commission for real estate?
Most listing agreements allow a broker to charge a commission when introducing a buyer. This means, when a person can pay the purchase price and is also ready and willing. The buyer must be able to execute the contract by showing that he has the money available to acquire the property.
What happens if a seller doesn’t accept the buyer’s offer?
If a prospective buyer makes an offer that satisfies the terms of the deal, a broker has earned his commission even if the buyer refuses to sell. Offer must meet the terms of the listing agreement. A buyer offer that is lower than the sale price does not entitle the real estate broker to a commission.