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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.
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.
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:
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.
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.
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.
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.
Traditionally, managing real estate agency agreements involves several manual steps, including:
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:
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.
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.
Juro leverages generative AI to draft contracts quickly and accurately. AI tools help identify and mitigate risks, ensuring compliance and providing negotiation insights.
Juro provides a single, secure database for all contracts. This centralized storage offers comprehensive visibility into contract statuses, deadlines, and obligations.
Juro integrates seamlessly with tools like CRM and project management software, minimizing disruption to existing workflows.
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.
A real estate agency agreement template is a ready-made contract between a property owner and the agent who represents them in a property deal, such as a sale or a lease. It records what the agent will do for the owner and how the agent's commission is worked out.
Usually, yes. In many states, an agent can't enforce a claim to commission without a signed written agreement, and without one the two of you may remember the fee and the notice period differently. A one-page agreement protects the owner as much as the agent, because it limits what the agent can charge and when.
A real estate agency agreement sets the terms between an owner and their agent, before anyone has found a buyer or tenant. A real estate purchase agreement is the contract between buyer and seller for the sale itself, covering the price and the date the property changes hands.
Under an exclusive agreement, one agent represents you for the whole term and usually earns a commission however the property sells, sometimes even if you find the buyer yourself. Under a non-exclusive agreement, you can list with several agents and only pay the one who brings the buyer or tenant. Check which type the template uses before you sign, because the difference can cost you a full commission.
Check exactly when the commission is earned, for example when a buyer signs or only when the sale closes, since a deal that falls through could otherwise still trigger a fee. Look closely at any protection period, sometimes called a tail clause, which lets the agent claim commission if you sell to someone they introduced after the agreement ends. Keep that period short and limit it to buyers the agent names in writing.
That depends on the termination clause, which normally sets a notice period and may add a fee for ending early. Owners should look for a right to end the agreement without a penalty if the agent isn't marketing the property as promised.
It's a sound starting point, but you'll need to set the commission and the exclusivity terms for each property, and check them against local real estate rules. For specific legal advice on your contract templates, consult an attorney.
Agencies can build the template in Juro once, then let agents generate each agreement from it with the property details and commission rate filled in. If your standard terms change, such as a new notice period, you update the template and every new agreement uses it. Signed agreements are stored in one searchable place, so you can see when each one ends before representation lapses.
Yes. Juro has a feature called Operator that drafts new templates from your existing contracts. It picks up your drafting style and the positions you usually take on commission and termination, so the first draft reflects your risk appetite, and your legal team approves it before agents start using it.
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