Unit 6
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Buyer Agency Agreement
A written contract between a buyer and a real estate broker that creates an agency relationship. The broker agrees to represent the buyer's interests in locating and purchasing property.
A first-time buyer signs a buyer agency agreement with a broker who then shows properties, negotiates offers, and provides advice exclusively for that buyer.
Comparative Market Analysis (CMA)
A report prepared by a real estate licensee that compares a subject property to similar recently sold properties (comps) to estimate market value. Not a formal appraisal.
Before listing a home, the broker prepares a CMA showing three similar homes sold in the last 90 days to help the seller set a realistic asking price.
Contemporaneous Offers
Multiple offers on the same property received at approximately the same time. The listing broker must present all offers to the seller for consideration.
Two offers arrive within minutes of each other on a new listing. The listing broker presents both to the seller simultaneously for review.
Exclusive-Agency Listing
A listing agreement in which the seller agrees to pay commission only if the property is sold by the listing broker or any other broker. The seller retains the right to sell the property themselves without paying commission.
The seller lists exclusively with Broker A but can sell the home privately to a neighbor without owing commission under an exclusive-agency listing.
Exclusive Right-to-Sell Listing
The most common listing agreement. The seller agrees to pay the listing broker a commission if the property sells during the listing period, regardless of who finds the buyer (including the seller themselves).
Seller signs an exclusive right-to-sell listing. Even if the seller finds their own buyer through a friend, they still owe the agreed commission to the listing broker.
Market Value
The most probable price a property would bring in a competitive, open market under normal conditions, with both buyer and seller acting prudently and knowledgeably.
A CMA and recent appraisals support a market value of $425,000 for a three-bedroom home in a desirable school district.
Minimum Services
The basic services a broker must provide under a brokerage agreement in Illinois, including presenting all offers, answering questions about offers, and providing advice on negotiations and closing.
Even in a limited-service listing, the broker must still present all offers and provide minimum services required by Illinois license law.
Multiple Listing Service (MLS)
A cooperative database of properties listed for sale by member brokers. Allows sharing of listings and cooperative commission offers among brokers.
The broker enters the new listing into the local MLS so other agents can find it and show it to their buyer clients.
Net Listing
An illegal or discouraged listing agreement in which the broker's commission is the difference between the selling price and a net amount specified by the seller. Banned or heavily restricted in most states including Illinois.
A seller wants a net listing guaranteeing them $300,000 with the broker keeping anything above that. This type of agreement is prohibited in Illinois.
Open Listing
A non-exclusive listing agreement in which the seller can list with multiple brokers and pays commission only to the broker who actually procures the buyer. The seller can also sell the property themselves.
The seller lists the property with three different brokers under open listings. Only the broker who brings the successful buyer earns the commission.
Option Listing
A listing agreement that gives the broker an option to purchase the property at a predetermined price. Creates a conflict of interest and is heavily regulated or prohibited in many states.
A broker offers to list the property and also takes an option to buy it at $250,000 if it doesn't sell in 60 days. This requires full disclosure and is risky.
Statute of Frauds
A legal doctrine requiring certain contracts, including real estate sales contracts and brokerage agreements for commission, to be in writing to be enforceable.
A seller verbally promises a 6% commission but later refuses to pay. Without a written agreement, the broker cannot enforce the commission claim under the statute of frauds.