The real estate brokerage agreement, is a key part of every real estate transaction in Slovenia. We sign it with a real estate agency in the process of selling or buying real estate. It is a legally binding contract between a real estate agent and their client that describes the terms of their relationship. The brokerage agreement covers a range of topics, from the amount of the real estate agency’s commission for the duration of the contract to the responsibilities of both parties.
In this article, we will take a closer look at the brokerage agreement, the content of the agreement and its key elements. We will also talk about what we as a client in real estate transaction should pay attention to when signing such an agreemnt.
What is brokerage agreement?
A brokerage agreement is a legal agreement between a customer and a real estate agency, which defines the conditions for the purchase or sale of real estate. A real estate agent acts as an intermediary between a buyer and a seller and performs real estate brokerage on their behalf. The agency contract establishes a professional relationship between the real estate agent and the client. The contract describes the terms of the relationship, the duration of the relationship including the agent’s responsibilities, the client’s obligations and the amount and structure of the commission.
With a written contract on mediation in real estate transactions, the real estate company undertakes to endeavor to find and contact the client with a third party who will negotiate with him for the conclusion of a specific contract, the subject of which is real estate, and the client undertakes to will pay the real estate company for mediation if the contract is concluded.
The purpose of an agency agreement is to protect both parties involved in the transaction. It sets clear expectations and provides a framework for the agent to market and sell the property and for the client to receive the services they need when selling or buying their property.
Content of the contract on real estate brokerage
While agency agreements can vary slightly from one real estate agency to another, there are quite a few common elements that you can expect to find in most agency agreements.
According to the Act on Real Estate Brokerage, the following information must be provided in the real estate brokerage contract, which must be concluded between the real estate company and the customer:
- Name and surname of real estate agent.
- The amount of payment for mediation.
- Name of the insurance company, policy number and sum insured for liability insurance of the real estate company.
- Description of the costs of individual transactions.
- Type and amount of any additional services.
- Right to payment for mediation.
- The amount of payment for mediation when the customer finds a third party himself.
- Approximate price of the property.
- Description of the property subject to mediation.
- Duration of the contract.
What to pay attention to when signing an brokerage agreement?
Before signing an agency contract, it is imperative that you carefully read the business terms and conditions. Here are some key factors to consider:
- Fee structure: Make sure you understand how the brokerage fee will be calculated, what it includes and whether it is negotiable. You should also find out if there are additional costs that will be charged at the time of sale and which party will be responsible for paying those costs. Define in the contract exactly who will be responsible for paying all costs that will arise from the sale.
- Duration: Consider the length of the contract and whether it is in line with your sales or purchase goals. If you are selling a property, you may want to ensure that the contract does not expire before the end of the peak selling season. Most agency contracts are usually concluded for 6 to 9 months. Also, according to the law on real estate mediation, the contract can be concluded for a maximum of 9 months, and you can also agree with the real estate broker for a shorter period of time, or you can conclude the mediation contract again after its expiration.
- Responsibilities: Make sure the real estate agent’s responsibilities are in line with your expectations. Also consider which tasks you are willing to perform yourself and which tasks will be performed by an agent.
- Responsibility of the client: Be careful to inform the real estate agent about the condition of the property. Before signing the contract, according to the law, the client must inform the real estate company about all the circumstances that are important for the provision of mediation services. As a customer, you must also submit all available documentation about the property to the broker for inspection.
- Anonymity: Consider whether you want to remain anonymous when selling or buying real estate. If you want to, let the real estate agent know.