What is a Real Estate Agency Agreement and How Does it Work?
Signing paperwork might not be the most exciting part of buying or selling property, but understanding your agency agreement sets the foundation for a successful real estate transaction. I've noticed that many people skip through this critical document without really knowing what they're signing. Let's fix that by breaking down everything you need to know about real estate agency agreements.
Agency Agreement: A legal contract between a real estate agent and their client (buyer or seller) that establishes their professional relationship and outlines the agent's responsibilities. The agreement specifies the services the agent will provide, the duration of the relationship, and how the agent will be compensated.
Types of Agency Agreements
You'll encounter several types of agency agreements during your real estate transactions. Each serves a different purpose and comes with its own set of terms:
Exclusive Right to Sell: The most common type, giving one agent the exclusive right to sell your property and earn a commission, regardless of who finds the buyer.
Exclusive Agency Listing: Similar to exclusive right to sell, but you won't owe a commission if you find a buyer yourself.
Open Listing: You can list with multiple agents, but only pay the one who brings a buyer.
Buyer Agency Agreement: Formalizes the relationship between you and your buyer's agent.
Dual Agency Agreement: Used when one agent represents both buyer and seller (where legal).
Key Components of an Agency Agreement
Every agency agreement contains several critical elements that protect both you and your agent:
The length of time the agreement remains valid
How much commission you'll pay and when it's due
What services your agent will provide
Your responsibilities as the client
A detailed description of the property (for listing agreements)
How to end the agreement if needed
Rights and Responsibilities
Your agent takes on several important duties when signing an agency agreement. They must:
Act in your best interest at all times
Market your property effectively (for sellers)
Keep you informed about all offers and relevant information
Maintain confidentiality about your personal information
As a client, you also have responsibilities:
Provide accurate information about your property
Work with your agent in good faith
Pay the agreed-upon commission when due
Common Misconceptions
Let's clear up some confusion about agency agreements:
Each agreement is unique and can be negotiated
Most agreements can be terminated under specific conditions
Verbal agreements don't protect you or your agent
Commission rates can be discussed and adjusted
Benefits of Having a Written Agency Agreement
A written agreement protects everyone involved by:
Creating clear boundaries and expectations
Establishing communication guidelines
Providing legal protection if disagreements arise
Setting clear goals for the relationship
Tips for Reviewing an Agency Agreement
Before signing, take these steps:
Read every section carefully
Ask questions about the commission structure
Review the termination clause
Make sure you understand all terms and conditions
Working with Bellhaven Real Estate
At Bellhaven Real Estate, we believe in transparency and clear communication. Our agency agreements reflect this philosophy, spelling out exactly what you can expect from our relationship. We take time to explain each section and answer your questions before asking for your signature.
Ready to Move Forward?
Understanding your agency agreement is the first step toward a successful real estate transaction. Contact Bellhaven Real Estate to discuss your real estate goals and learn more about our approach to agency agreements. We're here to guide you through every step of the process.