Broker Bryant's crash course on covering your arse!

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

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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Comments (30)

Jay McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Exeter, NH
Real Estate Broker

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 

Nov 20, 2006 10:45 AM
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate
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!
Nov 20, 2006 10:50 AM
Gabriel Silverstein
Angelic Real Estate, LLC - New York, NY
SIOR
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).
Nov 20, 2006 11:37 AM
ASHEVILLE REALTY REFERRAL RESOURCE 828-776-0779
REAL ESTATE REFERRAL NETWORK - Asheville, NC
CONTACT janeAnne365@gmail.com

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.

Nov 20, 2006 12:38 PM
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
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.
Nov 20, 2006 12:40 PM
Yael Warman
Right About Real Estate - Dania Beach, FL

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)) 

Nov 20, 2006 01:58 PM
nobody - I asked for this to be deleted i
c - Winston-Salem, NC

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 20, 2006 03:21 PM
Randy L. Prothero
eXp Realty - Mililani, HI
Hawaii REALTOR, (808) 384-5645

No employees here.  Just us independant contractors.

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

  1. A contract is only as good as the two people signing it.
  2. 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.

Nov 20, 2006 05:07 PM
Sharon Simms
Coastal Properties Group International - Christie's International - Saint Petersburg, FL
St. Petersburg FL - CRS CIPS CLHMS RSPS

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?)

Nov 20, 2006 09:44 PM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

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.

Nov 20, 2006 10:42 PM
Teresa Boardman
Boardman Realty - Saint Paul, MN
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.
Nov 20, 2006 11:59 PM
S. Leanne Paynter ☼ Broward County, FL
United Realty Group, Inc. - Davie, FL
Davie, Plantation, Cooper City & Weston Specialist

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.

Nov 21, 2006 12:09 AM
Peter Andres - Lic. in FL & NY GRI,SRES,CNE
REALTOR - The Villages, FL

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 21, 2006 01:22 AM
Jason Price
Mortgage Financial Group, Inc - Tavares, FL
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.
Nov 25, 2006 02:44 AM
nobody - I asked for this to be deleted i
c - Winston-Salem, NC

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. 

 

 

Nov 25, 2006 03:43 AM
Kathy McGraw
CELLing Realty - White Water, CA
Riverside County CA Real Estate
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.
Oct 24, 2007 03:38 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

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.

Oct 24, 2007 04:48 AM
Kathy McGraw
CELLing Realty - White Water, CA
Riverside County CA Real Estate

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.......

Oct 24, 2007 05:57 AM
Sandra Mathewson
RE/MAX 4000 - Grand Junction, CO
CRS,ABR,SRES,GRI,CDPE,PSA,SFR

Hello,

I just came across your post. I am a RE/MAX agent, 100% commissions. I left my broker end of June, all files were closed. The last commission was paid 12 days laters after all paperwork was in and 12 days after I left.  The broker gave 25% to another agent who had helped me on the file while on vacation.  I told the bookkeeper to give hime $100 out of the $2040 commission. The broker "didn't feel it was fair" and gave him 25%.  I am looking for my independant contractor agreement and the broker tells me I never signed one.  What are my chances of getting the money in small claims court without an agreement.  I can prove i was always paid 100% on previous commissions

Jul 19, 2012 10:35 AM
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Sandra. My opinion is that without a contract you don't have a leg to stand on. And is it really worth it for $400? Live, learn and move on.

Jul 19, 2012 10:07 PM