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Michelle David

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Real Estate Commission Agreements


Owners who list their home must sign a Real Estate Listing Commission Agreement.  This document is provided by the Garden State Multiple Listing Service (GSMLS).  It is very important that the commission agreement is completed in its entirety.  A real estate commission represents thousands of dollars; make sure you understand the agreement before you sign your name.

When an owner signs a commission agreement, it is only between the owner and the broker.  The owner must approve of the commission paid to the buyer’s broker.

Listing Commission Agreement Details

·         Information Box

o    Owner’s name and address;

o    Property address;

o    Listing broker’s name and address; and

o    Listing or rental price.

·         Term of Agreement

o    Commencement date and expiration date.

·         Disclosure of Business Relationship Box

o    Name of realtor and brokerage; and

o    Business relationship of realtor.

·         Offer of Cooperation/Compensation Box

o    The owner expresses intent to cooperate with other brokers and the amount of compensation that broker will be paid.

·         Lockbox

o    The real estate agent must get permission to place a lockbox on the property.

·         Commission Payment

o    The commission, usually a percentage, must be written.  It usually includes an MLS processing fee, which is a fee between brokers.

·         Signatures

o    The listing agent and owner must sign and date the commission agreement.  The broker’s ID number should be included.

What you may not know about Commission Agreements

Unless you took a real estate salesperson’s course yourself, there are a few items that do not jump out on the commission agreement.  For example:

1.     The commission agreement must be sent to GSMLS within 48 hours.

2.     If the property is a part of an estate, the owner may be an attorney or Trustee acting on behalf of the owner.

3.     A commission is not paid until a property closes.

4.     If a listing has expired and the owner wishes to re-list with the same broker, a new commission agreement must be completed.

5.     If a buyer saw the property through the listing broker and decides to buy the property within 90 days of the expiration of the listing, the owner must pay the listing broker a commission (unless the owner is now listed with another broker).

6.     All commissions and terms are negotiable.

7.     There is no standard commission amount.

8.     The managing broker should review the commission agreement after a sales associate signs it.

9.     The owner must get the pink copy of the commission agreement as soon as it is signed.

10.  The New Jersey Law against Discrimination and Federal Fair Housing Laws appears on the back of the commission agreement.  


Cranford Listing Agent


Listing agent Michelle David of the Cranford area RE/MAX Vision offers owners listing choices they feel comfortable with.  Do not sign a real estate commission agreement if you don’t understand what you are signing.  Call Michelle David for more information at 908-208-3775, or email her for a free consultation.

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