Everything you need to know about real estate agency contracts

Real estate agency contract: what is it?

A real estate agency contract governs the collaboration between a real estate agency and its clients. The agent agrees to provide certain services, such as finding suitable properties or potential buyers. In return, you pay a commission based on the sale price or rent.

Legal requirements

• Written contract with the identity of the parties involved, agency services, and commission
• Information about the right of withdrawal

Responsibilities of the agency

• Search for suitable properties and potential buyers
• Conduct property viewings and price negotiations
• Preparation of the sales contract
• Advice on market prices and assistance with financing

Client obligations

• Support and provide relevant information
• Provide documents for the listing
• Inform about any changes that might affect the agreement

Duration

• Normally 6 months to 2 years
• Option for a contract without a defined term
• 3-month notice period for both parties

Types of real estate agency contracts

There are different types of real estate agency contracts that vary depending on the collaboration between the agency and the client:

• Exclusive contract: Only the agent can sell or rent the property. This provides more security and motivation for the agent.

• Simple agency contract: The client can search for properties themselves, while the agency is also active. However, if the client is successful, they still have to pay the agreed-upon commission.

• General agency contract: The agency can generally work on the mediation of properties. You decide whether to make use of their services.

What should a real estate agency contract include?

A real estate agency contract serves as a guideline for the collaboration between you and your real estate agent, clarifying all relevant terms and conditions. It is important that all significant points are thoroughly addressed in the contract to avoid misunderstandings later on. The following information should be included in a real estate agency contract:

• Names of both parties: The contract should clearly state the names and contact details of both parties.

• Property description: A detailed description of the property, including its location and features, should be included.

• Commission fee: The contract should specify the exact commission the agent will receive upon the successful completion of a sale or rental agreement.

• Duties: This section of the contract outlines the obligations and responsibilities of the agency, such as finding buyers or renters and organising property viewings.

• Compensation for efforts: If applicable, the contract should specify whether the agent will receive compensation in the event the contract is not fulfilled.

• Exclusivity & dual agency information: The contract should indicate whether the agency has exclusive rights to mediate the sale or rental of the property and the consequences of dual agency (working with multiple agencies).

• Contract duration: The length of the contract should be clearly stated, along with its start and end dates.

• Termination conditions: Finally, the contract should clarify the conditions under which and how the contract can be terminated by either party.

Right of withdrawal in the real estate agent contract

In a real estate agent contract, you have a statutory right of withdrawal. Within 14 days after the conclusion of the contract, you can cancel the contract without providing any reasons. The withdrawal must be made in writing, either by post or email.

Note: If you have already tasked the real estate agency with handling a property transaction and the service has been fully provided, the right of withdrawal expires.

Financial aspects of the real estate agent contract

Real estate agent commission

The real estate agent commission, also known as the real estate agent's fee, is the charge that real estate agencies receive for their services. It is specified in the agent contract and is calculated as a percentage of the sale or rental price. The exact commission should be documented in writing in the contract to avoid misunderstandings. The commission amount can vary by region and is often negotiable.

Reimbursement of expenses or compensation

A real estate agent contract may also include reimbursement of expenses or compensation in addition to the agent's commission. The reimbursement of expenses must be specified in the contract, as it is not regulated by law. Before signing the contract, it is important to clarify the conditions and amount of the reimbursement. In addition to the commission, other costs such as advertising and appraisals may arise, and these should be reasonable.

Frequently asked questions about the real estate agent contract

Can you sell your house privately with a real estate agent contract?

Whether you can sell your house privately depends on the terms of your real estate agent contract. Some contracts include an exclusive listing clause, which means that only the real estate agent can sell the property. In such cases, a private sale is not possible.

What happens if the real estate agency doesn't sell the house?

If the real estate agency does not sell the house, it depends on the provisions in your contract whether you still have to pay a commission. In general, a commission is owed if the main contract (e.g., purchase or rental agreement) has been facilitated by the agent.

Is a real estate agent contract paid?

A real estate agent contract is generally subject to fees. The amount of the agent's commission can be freely negotiated, as it is not legally regulated. However, it is important that the commission is clearly defined in the contract. In addition to the commission, other costs such as advertising and appraisals may arise, and these should be reasonable.