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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.
