Listing & Buyer Agreements
~11 min read · Contrast exclusive right to sell, exclusive agency and open listings — and when commission is earned.
Employment contracts power the brokerage business: three listing types with three risk profiles, the buyer-representation mirror image, and the commission rules — earned by a ready, willing, and able buyer, owed even through protection periods. The exam tests type identification relentlessly.
The three listings
Open listing: nonexclusive, any number of brokers, commission only to the one who procures the buyer — and none if the OWNER sells (a unilateral contract). Exclusive agency: ONE broker, but the owner retains the right to sell personally without commission — the seller-sale escape hatch. Exclusive right to sell: one broker who earns the commission no matter who sells during the term — owner included; the industry standard because it protects the marketing investment. Every exclusive listing needs a definite termination date (automatic extensions violate license law in most states); net listings — broker keeps everything above a set price — are illegal or condemned nearly everywhere.
- Open: anyone; procuring broker only; owner sells free
- Exclusive agency: one broker, owner can still sell free
- Exclusive right to sell: commission regardless of who sells
- Definite end date required; net listings: avoid/illegal
When commission is earned
Default rule: the fee is earned when the broker produces a ready, willing, and able buyer on the seller's terms — technically earned at contract formation even if the SELLER later kills the closing (a seller who refuses their own price owes the fee). Forms commonly restate payment as due at closing. Protection/safety clauses extend the fee past expiration for buyers the broker introduced (a registered-prospect list within a stated window) — defeating the wait-out-the-listing scheme. Commissions are always negotiable; any suggestion of 'standard rates' is antitrust poison.
- Ready-willing-able buyer at the seller's terms = earned
- Safety clause: introduced buyers still owe fee post-expiration
- Rates negotiable — never 'standard'
Buyer-representation agreements
The buyer-side mirror: exclusive right to represent (fee earned on any purchase during the term, typically offset by seller-paid cooperation), exclusive agency, and open variants. Contents parallel listings: term with a definite end, services, compensation and offsets, property parameters, and duties both ways. These agreements convert the buyer from customer to client — the fiduciary line — and modern practice increasingly requires them in writing before touring.
Worked example
A seller signs a 90-day exclusive-agency listing. During the term: (a) the broker's ads produce buyer X, who offers full price, but the seller refuses to sell 'for personal reasons'; (b) the seller's coworker — never touched by the broker — offers, and the seller sells to him instead. After expiration, (c) buyer X returns within the 60-day safety window and buys directly from the seller. Which events owe commission?
(a) Buyer X was ready, willing, able at FULL price — the fee was EARNED at that moment; a seller refusing their own terms still owes it (the escape in exclusive agency is selling personally, not refusing performance). (b) The coworker sale: this IS the exclusive-agency escape — an owner-procured buyer closes commission-free; under an exclusive RIGHT TO SELL the same sale would owe the fee, which is the entire difference between the forms. (c) X's return inside the safety clause: the broker introduced X during the term; the protection period captures the direct purchase — commission owed. Score: (a) owed, (b) free, (c) owed — and the type of listing decided (b) entirely.
Common exam pitfalls
Blurring exclusive agency and exclusive right to sell.
Both have one broker; only exclusive AGENCY lets the owner sell personally without commission.
Thinking a seller's refusal erases the earned fee.
Producing a ready-willing-able buyer on the listing's terms earns the commission — the seller's cold feet don't unearn it.
Quoting 'the standard commission.'
There is none. Rates are negotiated per agreement — 'standard' talk invites price-fixing liability.
Open pays the finder, agency spares the owner, right-to-sell pays regardless — and safety clauses remember who you met.
Recap
- Open / exclusive agency / exclusive right to sell — escalating protection
- Exclusive agency: owner-sale escape; right-to-sell: none
- Definite termination date; no automatic extensions; no net listings
- Fee earned by a ready-willing-able buyer on the seller's terms
- Safety clauses capture introduced buyers post-expiration
- Buyer-representation agreements mirror the structures; all fees negotiable
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