Real Estate Independent Contractor Agreement

Real estate independent contractor agreement determines working relationship between agent and broker.

A real estate independent contractor agreement is a written contract between the broker and the real estate agent governing the terms and compensation of their working relationship. Contracts vary from state to state, but the contents of the agreement remain essentially the same.

Independent Contractor Relationship

As an independent contractor, a real estate agent may determine work hours, lead generation, open house schedule, time off, vacation and other activities without the approval of the broker. The real estate agent is not treated as an employee for state and federal tax purposes, although the broker must supervise the real estate agent by reviewing all documents prepared by the real estate agent in connection with a listing or sale.

Compensation

A broker and real estate agent usually share a percentage of the commission received from the sale of real property. Commission splits are determined by the experience of the real estate agent and the benefits the broker provides. For example, a new real estate agent who takes advantage of a broker's full-time administrative staff, advertising discounts and floor time might share 50 percent of the commission from each property sold with the broker. An experienced real estate agent with a stable of clients and high productivity may only pay the broker 30 percent of the commission from each property sold with the broker.

Payment

A real estate agent is paid after a transaction closes. Upon review of a complete file, the broker will release funds to the real estate agent based on the compensation agreement contained in the real estate agent independent contractor agreement.

Expenses

All expenses incurred by the real estate agent to acquire and market listings are paid for by the real estate agent. However, if the broker elects to advance funds to pay a real estate agent's expenses, the broker may deduct the full amount advanced from compensation payable to the real estate agent on any transaction without notice.

Automobile Insurance and Worker's Compensation

Real estate agents are required by law to carry automobile insurance for liability and property damage in the amounts prescribed by the broker. In some states, brokers must carry worker's compensation insurance for all real estate agents under their supervision. However, worker's compensation insurance does not change the independent contractor status of the real estate agent.

Personal Assistants

Any personal assistants, whether licensed or not, must be approved by the broker before being hired by a real estate agent.

Termination

In most states, a real estate independent contractor agreement can be terminated with or without cause. Because the real estate agent works in the name of the broker, all transactions performed by the real estate agent become the property of the broker. The real estate agent must surrender any listings or pending sales to the broker immediately upon termination unless other arrangements are made in writing.

References

• National Association of Realtors: Law and Policy
• California Association of Realtors: ZipForm6: Independent Contractor Agreement

Resources

• All Business: Sample Real Estate Independent Contractor Agreement