Agency agreements: listing and buyer representation contracts

Who employs the broker?

A listing agreement employs a broker to represent a seller. A buyer representation agreement employs a broker to represent a buyer. These service contracts establish authority, duties, and compensation; they do not themselves transfer ownership. Identify the parties, property or search scope, services, compensation and when it is due, and termination terms. Commissions are negotiable. Read the actual agreement before deciding whether a fee has been earned or is payable.

Compare listing types

An open listing permits multiple brokers; ordinarily the broker who is the procuring cause earns the commission, and the owner can sell independently without a commission. An exclusive agency listing employs one broker but reserves the owner's right to sell independently without a commission. An exclusive right-to-sell listing generally entitles the broker to the agreed commission on a sale during its term even if the owner finds the buyer. A net listing instead describes compensation as the amount above the seller's agreed net; it creates a conflict because a higher broker return may compete with the seller's interests.

California exclusive listings must carry a definite, specified termination date. Claiming compensation under an exclusive agreement lacking that date is grounds for discipline under Business and Professions Code section 10176(f). A listing is not authority for a broker to sign a purchase contract for the seller unless separately authorized.

California buyer agreements

A buyer-broker representation agreement must be in writing and executed as soon as practicable, but no later than execution of the buyer's offer to purchase real property. The agency disclosure form must be provided before execution of the representation agreement. Required terms address broker compensation, services, when compensation is due, and contract termination.

Civil Code section 1670.50 limits the agreement to three months from the date it was made, except agreements between a broker and a corporation, limited liability company, or partnership. Agreements cannot renew automatically. A renewal must be written, dated, and signed by all parties; a renewal subject to the limit cannot exceed three months from the date the renewal was made. An agreement violating these duration or renewal provisions is void and unenforceable.

California regulation creates a rebuttable presumption that obtaining signatures before an in-person or virtual buyer-agent showing is practicable. A seller's agent showing solely for the seller is not thereby representing the buyer. Distinguish expiration from early revocation: a principal may end authority, but an early ending can still raise contractual liability. Mutual cancellation should document remaining obligations.