1. Modern Real Estate Practice in Illinois
Chapter 6: Brokerage Agreements

2. Listing Agreements with Sellers
Types of listing agreements
Exclusive right-to-sell listing
Exclusive-agency listing
Open listing
Net listing
Option listing
© 2008 Dearborn Real Estate Education

3. Listing Agreements with Sellers
Expiration of listing period
Broker Protection clause
Provides that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner
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4. © 2008 Dearborn Real Estate Education
The Listing Process
Pricing the Property
Competitive market analysis (CMA)
Calculating sales price, commission and net to seller
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5. Information Needed for Listing Agreements
Names and relationship, if any, of owners
Street address and legal description of property
Size, type, age, and construction of improvements
Number of rooms and their sizes
Dimensions of the lot
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6. Information Needed for Listing Agreements
Details about any existing loans and the possibility of seller financing
Amount of outstanding special assessments
Zoning classification of property
Current property taxes
Neighborhood amenities
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7. Information Needed for Listing Agreements
Any real property to be removed from the premises
Any additional information that would make the property more appealing and marketable
Any required disclosures concerning agency representation and property conditions
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8. © 2008 Dearborn Real Estate Education
The Listing Agreement
Illinois law requires the following disclosures be included with listing contracts
Disclosure of material facts
Disclosure of interest
Disclosure of any special compensation
Earnest money and purchase default
Disclosure of property condition
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9. © 2008 Dearborn Real Estate Education
The Listing Agreement
Listing Agreement Issues
Type of listing agreement
Broker’s authority and responsibilities
Names of all parties to the contract
Brokerage firm
Listing price
Real property and personal property
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10. © 2008 Dearborn Real Estate Education
The Listing Agreement
Listing Agreement Issues
Leased equipment
Specific identification of the property
Proposed dates for closing and buyer’s possession
Closing issues
Evidence of ownership
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11. © 2008 Dearborn Real Estate Education
The Listing Agreement
Listing Agreement Issues
Encumbrances
Homeowner warranty program
Commission
Termination
Broker protection clause
Warranties by the owner with reference to type of deed that will be used
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12. © 2008 Dearborn Real Estate Education
The Listing Agreement
Listing Agreement Issues
Indemnification (“hold harmless”) wording
Nondiscrimination
Antitrust wording
The signatures of the parties
The date the contract is signed
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13. Buyer Agency Agreements
A buyer agency agreement is an employment contract under which
the broker is employed as the buyer’s agent
the buyer is the principal
the purpose is to find a suitable property for the buyer
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14. Buyer Agency Agreements
Types of Buyer Agency Agreements
Exclusive buyer agency agreement
Exclusive-agency buyer agency agreement
Open buyer agency agreement
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15. Buyer Agency Agreements
Buyer Representation Issues
The licensee should make the same disclosures to the buyer that the licensee would make in a listing agreement
The licensee should explain the forms of agency available and the parties’ rights and responsibilities and services provided under each type
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16. Buyer Agency Agreements
Compensation Issues
Buyer’s agents may be compensated in the form of a flat fee for services, an hourly rate or a percentage of the purchase price
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17. Termination of Broker Employment Agreements
An employment contract may be cancelled
when the agreement’s purpose is fulfilled
when the agreement’s term expires without a successful transfer
if the property is destroyed or its use is changed by some force outside the owner’s control, such as zoning change or condemnation by eminent domain
© 2008 Dearborn Real Estate Education

18. Termination of Broker Employment Agreements
An employment contract may be cancelled
if title to the property is transferred by operation of law, as in the case of the client’s bankruptcy
if the broker and client mutually agree to end the agreement or if one party ends it unilaterally (in which case he or she may be liable to the other party for damages)
© 2008 Dearborn Real Estate Education

19. Termination of Broker Employment Agreements
An employment contract may be cancelled
if either party dies or becomes incapacitated
if either the broker or client breaches the contract, the agreement is terminated and the breaching or canceling party may be liable to the other for damages
© 2008 Dearborn Real Estate Education