Prelicensing Video #6 Agency Contracts Unit 3.5

Travis Everette・2 minutes read

Compensation in real estate transactions is crucial, with exclusive right to sell agreements being the most common in North Carolina. Listing agents must find ready, willing, and able buyers to secure compensation, as well as understand different types of agreements to ensure fair compensation practices.

Insights

Exclusive agency agreements are essential to protect the office's best interests in real estate transactions, ensuring that only one specific broker is authorized to work with the seller.
Compensation in real estate contracts is not only about the amount but also includes the circumstances under which it is owed, emphasizing the importance of presenting a qualified buyer who is ready, willing, and able to complete the transaction.

Get key ideas from YouTube videos. It’s free

Recent questions

What is the purpose of exclusive agency agreements?
Exclusive agency agreements protect the office's best interests.

Related videos

Summary

00:00

Real Estate Contracts and Compensation Essentials

Unit 3.4 focused on agency relationships, while Unit 3.5 shifts the conversation to compensation.
Compensation in Unit 3.5 is about getting paid for services rendered, distinct from the agency discussion.
Exclusive agency agreements are crucial for ensuring the office's best interests are protected.
Compensation in real estate contracts not only includes the amount but also the circumstances under which it is owed.
Contracts in real estate are binding and have specific termination procedures that require mutual agreement.
Exclusive right to sell listing agreements are common and detailed contracts between the office and the seller.
Listing firms are hired to find buyers, not to sell the property, and are paid a finder's fee for this service.
Listing firms are owed their compensation when they find a ready, willing, and able buyer, regardless of the closing.
Proof of finding a suitable buyer includes presenting an offer that meets the seller's terms and shows the buyer's ability to pay.
Pre-qualification of buyers is essential in real estate transactions to ensure the seller pays the listing firm for finding a suitable buyer.

18:04

Key Aspects of Real Estate Agent Agreements

Proof of a buyer's ability to close a transaction is crucial for real estate agents
Ways to prove a buyer's ability include a pre-qualification letter and bank statements
A buyer must be ready, willing, and able to complete a transaction without strings attached
Producing a ready, willing, and able buyer is a key aspect of a real estate agent's job
Even if a seller rejects an offer, the agent may still be owed a commission if they produced a qualified buyer
Compensation for real estate agents can also be earned through closing deals
Agency agreements in North Carolina must have an expiration date and include a clause against discrimination
Sellers and buyers can discriminate, but agents must adhere to fair housing laws
Agency agreements must be signed by individual brokers on behalf of the office
Listing agreements set the target price for a property and determine the agent's compensation percentage

34:27

Real Estate Ownership Shares in Compensation

Negotiating ownership shares in lieu of cash compensation is common in commercial real estate
Sellers may offer a percentage of ownership in another property they own as compensation
Listing agreements can be flexible and apply to various types of properties
Compensation in real estate transactions is typically a percentage of the sales price
Open listing agreements do not require exclusivity and allow sellers to work with multiple brokers
Exclusive agreements come in two forms: exclusive agency and exclusive right to sell
Exclusive agency agreements allow the seller to work only with one specific broker
Exclusive right to sell agreements ensure compensation to the broker regardless of who finds the buyer
Exclusive right to sell agreements are the most common in North Carolina real estate
Exclusive right to sell agreements may not always be in the best interest of the client, but are beneficial for the broker.

52:01

Real Estate Listing Agreements Explained

Open listings are rare in real estate, where the seller only pays the agent who finds the buyer.
In an open listing, the listing agent only gets paid if they or their office find the buyer.
Exclusive agency listings allow the listing agent to get paid if they or their office find the buyer, or if another office brings the buyer.
The gold standard in listing agreements is the exclusive right to sell, ensuring the listing agent gets paid regardless of who finds the buyer.
Net listings, where the seller sets a net amount they want to receive, are discouraged as they limit the agent's compensation.
Limited service agreements, where the agent handles only parts of the transaction, are also discouraged due to the importance of full service in real estate.
For sale by owner (FSBO) situations may involve negotiating compensation with the seller without representing them fully.
Dual agency occurs when an agent represents both the buyer and seller in a transaction, which can lead to conflicts of interest.
A practical test example involves a listing agreement specifying the commission earned when a buyer is found at a certain price.
Test-taking strategy involves eliminating incorrect options to identify the correct answer efficiently.

01:08:21

Understanding Buyer Agency in Real Estate

Buyer agency is similar to listing agreements but focuses on finding properties for buyers, not buyers themselves.
Buyers pay agents to find any seller or property, not specifically to find buyers.
To claim a buyer's agent commission, closing on a property is necessary.
Buyer agency agreements can be oral initially but must be put in writing before an offer is made.
Unlike listing agreements, buyer agency agreements are not property-specific.
Compensation for buyer agents is typically negotiated to be paid by the seller or the seller's agent in a co-brokerage transaction.
If the seller does not offer sufficient compensation, the buyer may need to cover the difference in payment to the buyer's agent.
Buyer agency agreements allow agents to keep any additional compensation offered, such as bonuses for quick sales.
Agency relationships can be terminated through full performance, client death, or mutual agreement.
Co-brokered transactions help listing firms attract buyer agents by offering shared compensation, even though they are not obligated to do so.

01:25:27

Personalized self-paced math learning for all

Different individuals have varying paces when it comes to understanding math, leading to challenges in teaching at a suitable speed for everyone. To address this, a self-paced approach is recommended, where students can watch separate math videos at their own convenience and work through accompanying math worksheets, allowing for personalized learning and the ability to revisit concepts as needed.

Try it yourself — It’s free.