Broker Bryant's crash course on covering your arse!

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Broker Bryant's crash course on covering your arse!

Are you an employed Realtor? Or, are you an unemployed Realtor? Do you have an employment contract or are you just trusting your Broker to treat you fairly? It never ceases to amaze me how many Realtors do not have an employment contract. In fact I have heard from Realtors that didn't even know there was such a thing. How can that be? How could you go to work for someone and not have a contract? To me, this is the single most important document that you should have. With out it, in my opinion, you are unemployed.

In Florida this is not something that you learn at Real Estate Licensing school. It is never mentioned. Personally, I think that is a big mistake. There are many new Realtors that are taken advantage of because they did not realize that this is something they should have. Well folks, I'm here to clue you in a little bit today. You must have an employment contract, if not, you are jeopardizing your lively hood. You are at the mercy of your Broker. And trust me when I say, that is not a good position to be in. So once you have interviewed several Brokers and have decided who you want to work for, the next thing you need to do, is get it in writing. Here's a short list of things you need to agree on in advance and put them in your employment contract. Then have it signed by all parties and notarized. I don't care if you are going to work for your best friend or a family member, if you don't take care of this you are being foolish.

Ok, here goes.

Length of employment.
Compensation. What is your commission split on listings, sales, referrals, rentals etc.?
Advertising. What does the Broker provide and what are you responsible for? This should cover, business cards, mailers, web sites etc.
Office tools. Are they providing computers, phone, fax, copier etc and are there fees involved in using these items?
Automobile insurance. How much coverage is required?
E & O Insurance. How much are you covered by under the office policy and do you have to contribute to the cost?
Floor time. What is expected of you? How much time are you required to be in the office?
Exit strategy. This one is very important and seems to cause the most controversy. What happens to your listings if you leave? What about buyers? What about pending transactions? Remember your listings and existing transactions belong to your Broker. Unless these things are agreed in advance you could be leaving empty handed.

Now folks, I have no employees and I work by myself so I am in no way an expert on these things and I'm probably missing some things. But I know this is a good start. And remember, everything is negotiable. The point is, to sort these things out before they become an issue.

Also, all offices should have a policy manual. The policy manual will dictate inter office policy relating to agent to agent referrals, sales meetings etc. So be sure to get a copy of this before you agree to go to work for someone, as well.

So that's it. Broker Bryant's crash course on covering your arse. I hope it helps.

EDITTED: BY EMPLOYMENT CONTRACT I MEAN INDEPENDENT CONTRACTOR AGREEMENT. THANKS LINDA DAVIS

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Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 11/20/2006 04:40 PM

Comments (28)

employment contract, policy manual, education

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28 Comments on Broker Bryant's crash course on covering your arse!

NOV

2006

"The Lovely Wife Here"

I was quite surprised to find out that some of you do not...

have employment contracts!

If you don't you need to get one and get it ASAP!

Hunnee, I will that whole "arse" thing alone...

I am sure someone else will have some fun with that! :0)

TLW "The Lovely Wife"...Even I Have A Contract With My Broker...ROAR!

You make excellent points - I'd just change Employee Contract to Independend Contractor Agreement in most cases.

My agents are not employees and all have Independent Contractor Agreements. The IRS would have my home and first born if I had Employee Contracts with them. My Agreement includes much of what you list above but some of it I prefer to have in my policy and proceedures manual.

Hi Linda, Good point. Now you know why I said I wasn't an expert at this stuff. I think I will edit and add a line at the bottom. Thanks

Bryant,

The terminology may have been wrongish but the rest of it is right on. A perfect example - I'm amazed at how many agents have no idea what happens if they decide to leave a company.

Broker Bryant - yet another well done post!

Brokers would be stupid to try to keep your listings. All your clients have to do is fire you, then re-hire you with your new broker. Not very difficult.

BB, I've only been with one company and Manager Mark even told me we'd be signing contract agreement before I took my classes and then license exam (while they agreed to 'sponsor' me which is required here as well. I didn't know you could do this without a contract, but I'm also not sure everything you mention in here is covered. Great info and I will look up my papers (I can still find them!) and check them out. To me, it's okay either way as long as you know how it is handled up front (listings if you leave). Interesting.

Here in NJ Real Estate school, contracts are covered extensively. The very first contract that is reviewed is the Employment Contract --- it is an Independent Contractor agreement for purposes of the IRS but referred to as an employment contract for purposes of class and conversation. It doesn't need to be notarized but it does need to be signed and both the employer and the employee must have signed/dated original copies!

The exit strategy is covered in the "termination of this agreement" clause. Pretty standard stuff, there is a sample version at http://www.inc.com/tools/2000/12/21529.html

Thanks Linda!

Thanks Colleen!

Jennifer, That is not as easy as it sounds and would be in violation of our Code of Ethics. The fact is, listings belong to the Broker. It is very normal for them not to go with the Realtor who is leaving. That's why its so important to have this sorted at time of being hired.

Standard of Practice 16-20

^®

Also, if files are removed without the Brokers permission it is theft.

I've seen a lack of employment contract blow up badly. It's not just an oversight of real estate agents. In fact i have seen a guy lose millions of dollars in stock options because he took an internet company to some unforeseen heights and then was let go before he got his options. Actually, he was asking for his options as had been verbally agreed when they decided to fire him. Without a contract, you're a tumbleweed destined to blow out when the new manager takes over.

-Jeff Benfield

Hey BB,

Good point my dad had them back in the 70's and it saved his butt when an agent tried to sue him over something. I wasn't around then selling houses but I do remember him talking about it when I came home to visit.

Some agents just sign them and throw them into a drawer never to see daylight again.

Thanks Jay

Excellent point, I think mine expired back in 2000...I think I'll be looking into another independant contractor agreement to cover my brokers arse and mine!

I believe it is a legal requirement in Illinois for all sponsoring brokers to have independent contractor agreement with their sponsored licensees. For anywhere it isn't, you're right on Bryant, without it there is no protection (that doesn't require a lot of pain and lots of legal fees to obtain through a court).

I go over my employment contract with my brokers in major detail...also go over the meaning of independent contractor...also (this is REALLY mean) I require all brokers actually to read the ENTIRE policy manual and tell me what's in it. It just does my heart good, as it took me three moons and five dark cholcolate bars to get that manual together. Once again thanks for hitting topics that need attention.

Ok I read my contract and it's more complete than I was worried it would be. Thank you for making me keep tabs on my business! You're the best.

Great info here... don't forget to include in any contract a dispute resolution. Whether you define that each party will pay for its own cost for litigation or that the prevailing party will get their costs paid (btw, it would be great to hear opinions on pros and cons of each especially if you've had experiences with disputes).

It's also important to define the responsibilities of the Broker and the Associate (eg: Associate should be responsible for compliance w/ fair housing, continuing education, license renewal... broker's responsibilities should include things like support, access to facilities, paying your commissions (define when you get paid-e.g. The Friday after commission check clears))

Remember, that even with a contract, they(contracts) are only as good as the knowledge level of those under them. I mean if you or the other party do not know their rights and responsibilities, you might as well be signing a napkin. I can't count how many times I have seen people sign blank contracts for everything from rent to buying a car, and even houses.

Plus, the person/company behind the contract matters a ton too. In today's world where people see mortgages and even marriage as disposable, an employment contract is the least of their worries.

NOV

2006

No employees here. Just us independant contractors.

The contract is a good idea, but let me insert two thoughts:

A contract is only as good as the two people signing it.
Company policies can be changed. My wife works for a company who dropped a bomb on her this year. After reaching her 15 year anniversary and earning another weeks vacation. She was informed that the extra week that was in her employee manual is now cancelled.

What good was her contract or her employees manual? When we looked into it we were told they have the right to change company policy.

As agents the contract and the company policies only serve to give us more ammuniciation in court. Either way you will be looking for a new home to hang your license.

When I started with a real estate company in 1986 there was no contract. Years later, when they were instituted, they didn't discuss what happened to your listings when you left. Only sixteen years later, when I left the company, did I realize it mattered - hindsight. I was luckier than many when I left, and was able to take my listings and give that company a referral fee. Some agents wanted to leave but had golden handcuffs with many listings, none of which they could take.

And Jennifer, yes the client can ask to withdraw his listing, but the terms of his contract may preclude him listing with anyone else before the contract term is up.

We're in a new age - get that contract signed & keep it updated every year (how many of you have a contract that was for a year, and never updated?)

Great comments everyone thanks.

Sharon who gets the listing sis the biggest question I get from other Realtors and also do I get paid on my pendings. Neither one of these issues is addressed by law(which is agood thing) so the only recourse is the employment contract.

I am not an employee, but an independent contractor. I have a contract that is clearly laid out and there is a policy manual online so I can review the fine print. When I left my former company they did manage to keep $1000 dollard of one of my comissions. They violated the contract but to get the money back would cost more than $1000.00 so I just moved on. We do have to watch out for ourselves. I honestly don't think I could do this job if I were an employee. I enjoy the freedom of running my own business, Keller Williams is my business partner.

Boy, do I feel silly. I've been trusting my broker to treat me fairly and haven't felt that I'm at the mercy of my broker. Oh wait... I am the broker! I did say I'm feeling silly, didn't I?

Regarding office policy manuals, when I asked my previous employer (we'll call them the local "big red") for a copy of the office policy manual, the managing broker of the office and the Sr. VP looked at each other with a supposed 'puzzled look' and their reply went something like this: "Office policy manual? Do you know where it is?... No, I don't know if there is one. We'll look into it..." Ask me if they ever provided me with one or let me see one? Didn't matter much. I was already in the process of obtaining my broker's license.

You're 100% right... they should teach these things at the real estate licensing schools. They teach us how to protect the consumer and our licenses but not our livelihood. Shame on them.

The Brokers I worked with in the 1990's didn't have renewal contracts after the 1st year.

I had been fortunate enough to work with REMAX the past few years and found them to be extremely Professional. I have learned and implemented several ideas and methods from their system and incorporated them into my own agency.

Your crash course is a blessing to every agent on Activerain

NOV

2006

I would hate to say it, but the same is true with some mortgage brokers. I have heard of some brokerages telling new hires what is what and never putting it in writing. For those of you who currently do not have an ind. contractor agreement, I found these sites that provides small business documents for free: http://www.alllaw.com/forms/employment/ and http://www.lectlaw.com/formb.htm.

Thanks Jason. I'll be using that. My dad is all about free contracts. You are right though. I can't tell you how many times my last employer changed the rules on us. We always had an option though. It was one I took after a while.

OCT

2007

I just redid all my agents contracts.....and believe me these contracts are just important for Agents as they are for the clients we serve. Even though your Post is almost a year old....the information will always be timely and important to all of us....Thank you.

Hi Kathy,

You are waaaay back in Broker Bryant world to day! Thanks for stopping by. In our business it's always about the contract.

Hi,

Yes I am researching old Posts on Policies. As I said very good info......I can't find you in a Group, and the new search button makes it very hard to find what I want...especially for me; but I did find this, so not all is lost :) :)

And yes, everything is indeed about the contract.......

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Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc

Poinciana, FL

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Bryant Tutas-Tutas Towne Realty, Inc

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Office Phone: (407) 870-9003

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