Brokerage Fee Agreements

A brokerage fee agreement is signed by a broker and his client.

A broker is a third-party who negotiates a sale between a seller and a buyer. Brokers are typically paid for their services and as such, frequently require their clients to sign a brokerage fee agreement. The agreement outlines the scope of the business arrangement between the broker and the client.

Parties

A brokerage fee agreement identifies the party to the agreement. The client is the person or entity on whose behalf the broker is negotiating a sale or purchase. When identifying himself, the broker should include his state licensing number.

Fee

A brokerage fee agreement states the fee the broker is to be paid by the client in exchange for his services. The agreement should also state whether the fee is contingent upon a successful transaction or if the fee is non-refundable. Finally, future fees for ancillary brokerage services should be anticipated and stated in the agreement.

Scope

A broker fee agreement should identify the type of brokerage services that will be provided (i.e., residential mortgage vs. commercial mortgage) and the address of the property to be sold or purchased. The agreement should also state when it becomes effective and how long the it should remain in force.

References

• Lawyers.com: Types of Listing or Brokerage Agreements

Resources

• California Department of Insurance: Consumers: Standard Broker Fee Agreement