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Broker Agreement

This Agreement is entered by and between Jonas Adam, individually or collectively as the "Signee" and Jane Smith, as the "Signer", together referred to as the "Parties".
The Contract is dated [the date both parties sign].

1. Agreement terms

The Parties agree that the following agreement is dependent on the terms presented as follow:

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Broker Agreement

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What is a Broker Agreement?

A Broker Agreement can also be known as a Finder’s Fee Agreement or also a Referral agreement. It is a legal document that defines the conditions in which a Real Estate Broker will provide goods and services for a Buyer. The Broker will represent the Buyer in the purchase of goods or services from a Seller. 

A Broker Agreement should be signed in the presence of a licensed Notary Public, as this will allow it to be considered a legally binding document  

A Broker Agreement is used by a buyer when the buyer is starting a real estate search. Signing an agreement with a broker is good for both parties as it establishes and defines the terms of working together.

When do you need a Broker Agreement?

Before moving forward with a purchase agreement on a home, a home buyer will usually sign a Broker Agreement with a real estate broker. The agreement will define exactly who is working on behalf of the buyer. 

This document is beneficial when either the buyer or the real estate broker wants a commitment from the other party. A real estate broker won’t want to devote his time and energy to a buyer who might turn around and use another broker when he is ready to purchase a house. And, a buyer wants to know that the real estate broker has the time and motivation to help him find the right home.

A Broker Agreement is typically beneficial to both parties, and it’s an agreement that will allow the broker to work together with the buyer throughout the home buying process. 

What if you don’t complete a Broker Agreement?

Is it a good idea to sign a Broker Agreement? And, should you sign an agreement with the first broker you meet? As a buyer, you are going to have a lot of paperwork and documents to sign before you can buy a home

These documents are a variety of disclosures, agreements, and some are contracts, that will legally bind you. 

If you don’t sign a broker agreement, you run the risk that your agent walks away halfway through the process. And, your agent or broker runs the risk that she does all the hard work and you go off and have a different agent or broker finish the process and earn the commission.

A Broker Agreement is just a formal way of legally announcing you are working together, and its best for both parties to sign one. 

How do you fill out a Broker Agreement?

All legal documents can be a bit overwhelming. It’s a good idea to look at a sample agreement before you try to fill what out on your own without any help. You can find a variety of samples online, but remember that each state might have its own rules that could be different from other states. Make sure you review your state’s requirements before you fill out and legally submit any Broker Agreement. 

After you have reviewed some samples, next you should obtain an official Broker Agreement form. If you have hired an attorney, he should provide this form for you. Your real estate broker is likely also well-versed, and probably also has a copy of a Broker Agreement you could use. 

Now that you have the form, move forward. As with all forms, you’ll need to fill in basic information about yourself, including your name, birth date, and place of residency. Most importantly, when you’re done, you’re going to sign the form in the presence of a notary. He will also sign and date the document, and this will serve to make your Broker’s Agreement a legal document, and the buyer and broker can then move forward together.

Whenever you work with a notary, you’ll be required to show photo identification to the notary at the time of signing. This ensures they can verify your identity. The notary needs to see any photo identification that has your full name and picture, so he can match what you look like in person to your photo id. 

Man and Woman Near Table
Filling out a Broker Agreement should be a relatively painless and easy process, and will allow both buyer and broker to have peace of mind as they move forward in the real estate process. (Source)

What information do you need for a Broker Agreement?

To move forward, you’re going to need all the information for both broker and buyer. Since the form can be lengthy, you should ensure you’ve got all the necessary information handy before you start filling it out. You don’t want to have to stop halfway through to go look up a social security number.

Buyer information

Start by providing the buyer’s full, legal name, address, birth date, and social security numbers. You’ll need to do this for all parties that are buying (i.e. a husband and wife would need both of their information). You’ll want to ask a notary to sign after you’ve filled in all the information.

In some cases, you might be required to complete an Affidavit of Identity, which will serve to verify your identity before moving further. By completing this, there will be no issues when it comes time to purchase real estate.

Realtor’s information

In addition to the buyer’s information, you’ll also need your real estate broker’s. Similar to your information, at minimum, you’ll need full, legal name, but you’ll also need any identification numbers to show the real estate broker is registered with the state.

Why should I enter a Broker Agreement?

Two Person Shake Hands
Entering a Broker Agreement is legalizing a hand-shake agreement, and ensures that neither party can back out. (Source)

Legally, a “broker” is someone that arranges a transaction between a buyer and a seller. In terms of real estate, this means the middleman can help facilitate what will probably be the most complicated and most expensive purchase of the buyer’s life. 

Buying a home is a major endeavor. It costs a lot of money, and involves a lot of paperwork. The buyer needs to make sure the home is safe, there is an opportunity for a home inspection, and that he qualifies for a mortgage (if needed). 

A real estate broker will help facilitate all of that. The buyer does not want to risk being knee-deep in legal paperwork only to have a broker back out. The Broker Agreement will help ensure the buyer and broker work together to complete the transaction legally. 

Purchasing real estate can be complicated, having a Broker Agreement is one thing all parties can do to simplify the process. 

The general rule

It’s a good idea for both buyer and broker to enter a Broker Agreement. To easily complete an agreement, have all the information available ahead of time. The more prepared you are, the easier completing the form will be.

If you are married, make sure you’ve got all your spouse’s information as well. Your broker should be able to easily provide all of their license information.

Other factors to consider with a broker agreement

If you’re still having trouble filling out your Broker Agreement, some other things might help. Try using one of the following to assist you in when you are filling out your form: 

  • A recent change of address letter – if you’ve changed addresses recently, this form can help verify your current residence to use on your paperwork. 
  • Notice of Intent to Vacate - this will show your broker you are serious about buying a home. If you have notified your landlord you are not renewing your lease, show this form to your broker, so they know you are ready to purchase real estate.
  • Lease renewal agreement – this can be used to prove your address is correct. 

If you need additional assistance, start by talking to your real estate broker, or your attorney if you have one. And, remember there is a wealth of information available online to help you!

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