Real estate agency agreement template

Managing real estate transactions requires careful planning and clear agreements. One essential document in this process is the real estate agency agreement. 

This article will explore what a real estate agency agreement is, its purpose, who manages it, when it’s used, what it should include, the manual approach to managing these agreements, and how Juro can automate this process. 

What is a real estate agency agreement?

A real estate agency agreement is a legal contract between a property owner (the principal) and a real estate agent (the agent). This agreement outlines the terms and conditions under which the agent will represent the principal in buying, selling, or leasing real estate. It specifies the scope of the agent’s authority, the duration of the agreement, the commission structure, and any other relevant terms.

What is the purpose of a real estate agency agreement?

The primary purpose of a real estate agency agreement is to outline the terms and conditions under which the agent will represent the owner in the sale, purchase, or rental of a property. Here are the primary purposes of a real estate agency agreement:

• Define the relationship: It establishes the legal relationship between the property owner (principal) and the real estate agent (agent), clarifying the roles and responsibilities of each party.
• Outline the scope of services: The agreement specifies the services the agent will provide, such as marketing the property, conducting open houses, negotiating offers, and facilitating the closing process.
• Set the commission structure: It details the commission or fees the agent will earn for their services, including the percentage of the sale price or a fixed fee, and when this payment will be made.
• Specify the duration: The agreement sets the term during which the agent has the exclusive or non-exclusive right to represent the owner in the transaction. This can be for a fixed period or until the property is sold or leased.
• Include termination conditions: It outlines the conditions under which either party can terminate the agreement, including notice periods and any penalties for early termination.
• Legal protection: The agreement provides legal protection for both parties by clearly stating their rights and obligations, helping to prevent disputes and misunderstandings.
• Detail marketing efforts: It includes specifics on how the property will be marketed, such as listing on multiple listing services (MLS), online advertisements, print media, and other promotional activities.
• Confidentiality and disclosure: The agreement may include clauses on the confidentiality of certain information and the agent’s duty to disclose all material facts about the property to potential buyers or tenants.

In essence, a real estate agency agreement serves to formalize the working relationship between the property owner and the real estate agent, ensuring that both parties are clear on their expectations, responsibilities, and the terms of the engagement.

Who manages real estate agency agreements?

Real estate agency agreements are typically managed by the real estate agent and their supporting team. However, oversight and review might also involve:

Real estate brokers: They often oversee the agreements their agents handle, ensuring compliance with legal and ethical standards.

Legal teams: In larger firms, legal professionals may review and approve these agreements to ensure they meet all regulatory requirements and protect the firm’s interests.

Property owners: While the agent manages the day-to-day aspects, property owners need to review and understand the agreement they are entering into.

Administrative staff: In some agencies, administrative personnel help manage the paperwork and track the status of agreements.

When are real estate agency agreements used?

Real estate agency agreements are used in various scenarios, including:

Selling a property: When a property owner hires an agent to sell their property, an agreement outlines the agent’s responsibilities and compensation.

Buying a property: Buyers may engage an agent to help them find and negotiate the purchase of a property, with the agreement specifying the terms of this relationship.

Leasing a property: Property owners leasing their properties can use an agency agreement to define the terms under which the agent will find and manage tenants.

Property management: When property owners hire agents to manage rental properties, including collecting rent, handling maintenance, and dealing with tenants.

Commercial real estate: Agreements for commercial properties, detailing specific terms for leasing, selling, or managing business properties.

What should a real estate agency agreement template include?

A real estate agency agreement template should comprehensively outline the terms and conditions governing the relationship between a property owner and a real estate agent or agency. Here are the key elements that should be included:

Parties involved: Names and contact details of the property owner(s) and real estate agent or agency.

Property description: Detailed description of the property, including address, type, and key features.

Scope of services: Specific services the agent will provide, such as marketing, showings, and negotiations.

Term of agreement: Start date, end date, and conditions for renewal or extension.

Commission and fees: Commission rate or fixed fee, payment schedule, and any additional fees.

Exclusive or non-exclusive agreement: Whether the agent has exclusive rights or if other agents may be involved.

Duties and responsibilities: Detailed duties of the agent and obligations of the property owner.

Marketing plan: Description of how the property will be marketed and the budget for marketing expenses.

Confidentiality and disclosure: Clauses regarding confidentiality of information and agent’s duty to disclose material facts.

Termination clause: Conditions, notice period, and any penalties for early termination.

Dispute resolution: Procedures for resolving disputes.

Governing law: Jurisdiction and laws governing the agreement.

Signatures: Signatures and date of signing by both parties.

Miscellaneous provisions: Additional terms, amendments, force majeure, and severability clauses.

Including these elements ensures that the real estate agency agreement is comprehensive, legally sound, and provides clear guidance on the expectations and responsibilities of both parties.

The manual approach to managing real estate agency agreement templates

Traditionally, managing real estate agency agreements involves several manual steps, including:

• Drafting and reviewing: Creating the agreement from scratch or using a basic template, followed by a thorough review by all parties.
• Negotiating terms: Back-and-forth communication to agree on terms and conditions, which can be time-consuming.
• Storing documents: Physical or digital storage of signed agreements, often in disparate locations, making retrieval difficult.
• Tracking deadlines: Manually tracking agreement durations and renewal dates to ensure no lapses in representation.
• Compliance checks: Ensuring all agreements comply with local laws and regulations, which may require legal review.
• Document revisions: Keeping track of and implementing any necessary revisions or amendments to agreements.

Automate real estate agency agreements with Juro

Managing real estate agency agreements manually can be cumbersome and prone to errors. Juro’s AI-native contract management platform offers a solution to streamline this process. Here’s how:

Self-serve contracts

With Juro, commercial teams can generate, review, and approve contracts without needing constant legal oversight. This self-serve capability increases efficiency and frees up legal teams for more complex tasks.

Collaborative workflows

Juro’s platform facilitates real-time collaboration, allowing all parties to work together seamlessly.

This reduces bottlenecks and accelerates the contract lifecycle from drafting and review all the way through to contract execution.

AI-powered contract drafting and negotiation

Juro leverages generative AI to draft contracts quickly and accurately. AI tools help identify and mitigate risks, ensuring compliance and providing negotiation insights. 

Centralized contract repository

Juro provides a single, secure database for all contracts. This centralized storage offers comprehensive visibility into contract statuses, deadlines, and obligations.

Integration with existing tools

Juro integrates seamlessly with tools like CRM and project management software, minimizing disruption to existing workflows.

Real-time analytics and insights

Juro’s platform includes powerful analytics tools that provide real-time insights into contract performance and risk, helping businesses make informed decisions.

Juro’s AI-native contract automation platform empowers all teams to create, agree, execute and manage contracts up to 10x faster than traditional tools. To find out more, hit the button below to book your personalized demo. 

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