Tip Bits

Why is it even necessary to have a brokerage agreement with a buyer or tenant?

The brokerage agreement serves multiple purposes.  The first and perhaps most obvious reason is that the agreement establishes a client-agent relationship.  It is only under this arrangement that a consumer be treated as a client and provided with the licensee's expertise, advice and guidance.  A second reason is to establish the broker's compensation.  Without a written brokerage agreement, there is no compensation agreement in place and that could mean the broker would serve as a gratuitous agent for the consumer.  A third reason is that the GAR brokerage agreements have all of the required disclosures that must be made to a consumer at the first significant meeting.  These include the agent relationships offered by the broker and how the broker is compensated among others.

Although many licensees choose to delay the conversation about brokerage agreements, this is not a good practice.  In recent times, more and more buyers and tenants are refusing to sign a brokerage agreement if they have received all the assistance they needed.

What is the difference between executory and executed contracts?

• An executory contract is one in which all of the terms have not been met yet.  In other words, this is most often the case when a property is said to be "under contract."
• An executed contract is one in which all of the terms have been met.  This is what the contract becomes when we say it has "closed."  However, if there are items or terms that survived closing, then it is still executory.