How can you draft a broker-client contract that protects your interests?

1 Identify the parties

The first section of the broker-client contract should clearly identify the parties involved, including their names, addresses, phone numbers, and email addresses. You should also specify whether you are hiring the broker as a buyer's agent, a seller's agent, or a dual agent. A buyer's agent represents your interests as a buyer, a seller's agent represents your interests as a seller, and a dual agent represents both sides of the transaction. Depending on your state laws, you may need to sign a disclosure form that explains the different types of agency relationships and their implications.

2 Describe the property

The next section of the broker-client contract should describe the property that you are buying or selling, including its address, legal description, tax identification number, and any other relevant information. You should also indicate whether the property is residential or commercial, and whether it is subject to any liens, encumbrances, easements, or restrictions. If you are buying a property, you should specify your price range, preferred location, size, features, and any other criteria that you are looking for. If you are selling a property, you should provide the broker with any information that may affect the marketability or value of the property, such as defects, repairs, improvements, or disclosures.

3 Define the services

The third section of the broker-client contract should define the services that the broker will provide to you, and the services that you will provide to the broker. For example, the broker may agree to perform market research, advertise the property, arrange showings, negotiate offers, prepare contracts, coordinate inspections, appraisals, title work, and closing, and advise you throughout the process. You may agree to cooperate with the broker, provide accurate and timely information, make the property available for showings, review and sign documents, and pay the broker's commission. You should also state whether the broker has the authority to act on your behalf in certain situations, such as accepting or rejecting offers, signing contracts, or making deposits.

4 Set the duration

The fourth section of the broker-client contract should set the duration of the agreement, and the conditions for termination. You should specify the start date and the end date of the contract, and whether it is exclusive or non-exclusive. An exclusive contract means that you can only work with one broker for the specified period, and that you will owe the broker a commission regardless of who sells or finds the property. A non-exclusive contract means that you can work with multiple brokers, and that you will only owe a commission to the broker who sells or finds the property. You should also state the circumstances under which either party can terminate the contract before the end date, such as breach of contract, mutual consent, or performance.

5 Determine the commission

The fifth section of the broker-client contract should determine the commission that you will pay to the broker for their services. You should state the percentage or amount of the commission, and how it will be calculated based on the sale price or purchase price of the property. You should also state when and how the commission will be paid, and who will be responsible for paying it. Typically, the seller pays the commission to the listing broker, who then splits it with the buyer's broker. However, some buyers may agree to pay their broker a fee directly, or to reimburse their broker for any expenses incurred during the transaction. You should also clarify whether the commission is negotiable or fixed, and whether it is subject to any adjustments or deductions.

6 Resolve disputes

The sixth section of the broker-client contract should resolve disputes that may arise between you and the broker during or after the transaction. You should state how you will handle any complaints, claims, or conflicts that may occur, and what remedies or consequences will apply. You should also state whether you will use arbitration, mediation, litigation, or any other method of dispute resolution, and what rules and laws will govern the process. You should also include a severability clause that states that if any part of the contract is found to be invalid or unenforceable, the rest of the contract will remain in effect.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?