Burt M. Polson - Commercial Real Estate Broker

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"On the hook" with a listing agreement - part 2

In part one we discussed the three basic types of listing agreements.

I left you with the following question regarding the broker getting paid a commission for their efforts: “What if a potential buyer and seller talk and agree that when the broker’s listing agreement period expires they come together, execute a purchase agreement and consummate a transaction effectively cutting the broker out of the transaction and a commission.”

The listing agreement protects the broker for a set period of time against this provided a broker registers all the potential buyers who toured the property or made an offer that failed. If the seller and buyer consummate a sale during the period of time after the expiration of the listing the broker will still receive a commission.

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"On the hook" with a listing agreement - part 1

If you sold or leased real estate with an agent or broker, you probably signed a listing agreement, or what is formally called an “exclusive authorization and right to sell,” or “exclusive right to represent owner for sale or lease of real property,” depending on the form used.

Just as the title implies, the property owner is giving the real estate broker the exclusive right to represent them and their property in marketing and eventual transaction. There are also less exclusive representations called an “agency authorization” and an “open listing.”

A broker representing a seller has a fiduciary duty of care, integrity, honesty, and loyalty to their client. Did you know the seller has specific responsibilities as well in their representation to the broker?

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