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Real Estate Commission Agreement

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REAL ESTATE COMMISSION AGREEMENT

This Real Estate Commission Agreement (the Agreement) is made between the undersigned parties for the listing, marketing and sale of the Property described below. Client Name: Broker Name:

1. Property Identification

2. Appointment and Authority

Owner hereby appoints Broker as the Owner's exclusive agent to market and procure a buyer for the Property under the terms of this Agreement. Type of listing:

3. Term of Agreement

This Agreement commences on Effective Date: and terminates at 11:59 p.m. on End Date: unless earlier terminated in accordance with Section 12.

4. Listing Price and Marketing

Broker is authorized to market the Property by any lawful means including MLS, internet advertising, print advertising, signage and cooperative brokerage arrangements. Owner agrees to cooperate with Broker's reasonable marketing efforts and to allow showings upon reasonable notice.

5. Commission and Payment

Owner agrees to pay Broker a commission as compensation for Broker's services as follows:

Commission shall be earned and payable at the earlier of closing or when Owner accepts a binding contract for the sale of the Property. If the commission consists of a percentage, it shall be calculated on the gross purchase price before credits, prorations and closing adjustments.

Payment instructions: At closing, escrow shall pay the commission to Broker as instructed in escrow instructions. Owner authorizes Broker to deliver cooperating broker compensation and agent splits from Broker's commission.

6. Protection Period

If, within days after termination of this Agreement, Owner accepts an offer from a buyer to whom Broker procured showing, marketing materials or introduced in writing during the term, Owner shall pay the commission specified in Section 5.

7. Owner Representations and Obligations

Owner represents and warrants that Owner is the lawful owner of the Property and has full authority to execute this Agreement, convey the Property, and to pay the commission specified. Owner will disclose known material defects including but not limited to lead-based paint, mold, water intrusion and structural damage.

8. Broker Duties and Authority

Broker shall exercise reasonable efforts to procure a buyer, present offers promptly, advise Owner regarding negotiation, and coordinate showings. Broker is authorized to place signs, advertise, and cooperate with other brokers. Broker may engage agents and subcontractors to perform marketing and sale-related services.

9. Marketing Expenses and Advances

Marketing expenses (photography, staging, advertising) shall be paid by:

Any advances by Broker for marketing or repairs shall be reimbursed at closing from Owner's proceeds unless otherwise agreed in writing.

10. Termination and Remedies

Either party may terminate this Agreement upon written notice for material breach that is not cured within days. Termination does not extinguish Owner's obligation to pay commission earned under Section 5 or during the Protection Period.

If Owner wrongfully terminates this Agreement in breach of the exclusive right to sell, Owner shall be liable for the commission as liquidated damages, not as a penalty, provided such amount is reasonably related to Broker's anticipated damages.

11. Indemnification and Insurance

Owner shall indemnify, defend and hold Broker harmless from claims, liabilities, costs and expenses arising from Owner's misrepresentations or omissions, except to the extent caused by Broker's gross negligence or willful misconduct. Broker shall maintain errors and omissions insurance in customary amounts.

12. Notices

13. Dispute Resolution and Governing Law

This Agreement shall be governed by the substantive laws of the state in which the Property is located. The parties agree that disputes arising out of this Agreement shall be resolved by binding arbitration unless otherwise required by law; arbitration shall take place in the county where the Property is located unless the parties agree otherwise in writing.

14. Entire Agreement

This Agreement constitutes the entire agreement between Owner and Broker with respect to the subject matter hereof and supersedes all prior agreements, representations and understandings, whether written or oral. Any amendments must be in writing and signed by both parties.

Signatures

Owner (Seller)

Printed Name:

By (Signature):

Date:

Broker / Brokerage

Printed Name:

By (Authorized Sig.):

Date:

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What a Real Estate Commission Agreement Covers

A Real Estate Commission Agreement is a written contract between an agent or brokerage and a property owner or buyer that specifies commission rates, splitting arrangements, payment triggers, exclusivity, territory, and the agreement term. It identifies parties, the property, compensation method (percentage or flat fee), conditions for payment at closing or upon referral, and dispute-resolution procedures. When signed electronically, the agreement is generally enforceable under federal ESIGN law and applicable state e-signature statutes provided intent, consent, attribution, and retention requirements are satisfied.

Why a Clear Commission Agreement Protects All Parties

A written commission agreement reduces ambiguity about who is paid, when payment is due, and how splits are calculated, which lowers dispute risk and supports brokerage compliance with licensing rules and MLS policies.

Why a Clear Commission Agreement Protects All Parties

Who Typically Completes a Commission Agreement

Real estate professionals, clients, and brokerage administrators commonly prepare and sign commission agreements depending on the transaction role.

  • Listing agents and their brokerages who establish exclusive or non-exclusive listing terms and commission percentages.
  • Buyer agents and brokerages when agreeing referral fees, buyer-broker commissions, or co-broker splits.
  • Sellers, buyers, and property owners who accept terms and confirm payment triggers and disbursement instructions.

Each signer should confirm license numbers, payee details, and effective dates before execution to prevent payment delays and licensing issues.

Essential Elements to Include in the Agreement

A professional commission agreement includes clear compensation mechanics, defined payment events, parties' identities, exclusive term details, and procedures for amendments and disputes to minimize later conflicts.

Commission Rate

Specify percentage or flat fee, how it is calculated (gross sale price, net proceeds), and whether taxes or closing costs are excluded.

Payment Trigger

State exact event that triggers payment (closing, escrow disbursement, referral payment) and any conditions for withholding or prorating.

Brokerage Role

Identify the licensed brokerage, include broker license number, and state whether the broker holds funds in trust or directs escrow disbursement.

Term & Exclusivity

Define the effective date, expiration, and whether the agreement grants exclusive listing rights or permits other broker engagement.

Splits & Referrals

Detail splits between listing and selling brokers, referral fees, and how cooperating broker commissions are allocated.

Dispute Resolution

Include mediation/arbitration clauses, governing law, and venue for disputes to reduce litigation risk.

Key Required Information and Fields

Agent Name: Full legal name
Brokerage: Licensed firm name
Property Address: Street, city, state, ZIP
Commission Rate: Percent or dollar amount
Payment Terms: Trigger and method
Effective Date: MM/DD/YYYY

Step-by-Step: Filling and Executing the Agreement

Follow this sequence to create a complete agreement suitable for in-person or electronic signing.

  • 01
    Gather documents: Collect IDs, broker license, and property details.
  • 02
    Enter parties: Add full legal names and brokerage information.
  • 03
    Set terms: Specify rate, triggers, and splits clearly.
  • 04
    Sign and store: Execute signatures and save certified copies.

Configuring an Online Commission Agreement Workflow

Set up template fields, signer order, and authentication to ensure consistent execution across transactions.

Field Configuration
eSignature Enable email link or SMS code authentication
Authentication Use SMS, email, or KBA for higher assurance
Template Fields Lock commission and payee fields to prevent edits
Bulk Send Prepare for multiple listings or referrals

Where Completed Agreements Are Sent and Stored

After signing, route copies to all stakeholders and retain the master file per brokerage and regulatory requirements.

  • Broker Records: Master executed copy held by brokerage administrator
  • MLS Upload: Upload required listing items per MLS rules
  • Escrow/Closing: Provide copy to escrow or title for disbursement
  • Clients: Send signed copies to buyers and sellers

Digital Signing and File Format Considerations

Use platforms that produce secure, auditable signed PDFs and preserve an unalterable audit trail.

  • File Types: PDF and DOCX supported
  • Auth Methods: Email, SMS, or KBA
  • Integrations: CRM and MLS connectors

Ensure chosen eSignature tools support ESIGN/UETA compliance, store audit logs, and integrate with brokerage systems for retention and retrieval.

Common Timelines and Critical Dates

Track effective dates, termination notice windows, and payment timing to align commission obligations with closing activity.

Effective Date:

Date when obligations begin

Termination Notice:

Commonly 30 days unless otherwise stated

Payment Timing:

Typically payable at or after closing

Document Retention:

Retain per brokerage and tax rules

Amendment Window:

Amendments effective on signed date

Key Transaction Milestones for Commission Processing

Milestones align contract lifecycle with commission calculation and disbursement events.

01

Agreement Execution

Parties sign and the term becomes effective.

02

Showings & Offers

Activity period during which procuring broker may earn commission.

03

Acceptance & Escrow

Contract acceptance starts escrow and fulfillment steps.

04

Closing & Disbursement

Funds disbursed and commission paid per agreement.

Common Preparation Mistakes to Avoid

  • Leaving commission triggers vague or subjective, which creates grounds for later disputes and delayed payments.
  • Omitting broker license numbers or incorrect payee information that prevents escrow from processing commission disbursements.
  • Failing to specify whether commissions survive cancellation or how prorations are handled for partially performed services.
  • Neglecting to capture signer authentication and audit details when executing electronically, weakening proof of intent.

Consequences of an Incorrect Agreement

Commission Dispute: Delayed or withheld payment
Broker Sanction: License fines or disciplinary action
Escrow Hold: Funds withheld pending resolution
Tax Exposure: Incorrect reporting to IRS
Contract Voidance: Court may refuse enforcement
Reputational Risk: Client trust diminished

eSignature Vendor Pricing Snapshot for Commission Agreements

Compare common plan-level criteria and compliance features; signNow is listed first in the vendor column order for reference.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial No No Yes, limited Yes, limited
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions about Commission Agreements

Answers to common questions on signing, enforceability, revisions, and recordkeeping for commission agreements in the U.S.


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