New Jersey Real Estate Salesperson · Contracts
Real Estate Contracts
On this page 6 sections
In 30 seconds
Real estate practice runs on standard contracts: listing and buyer agreements that create agency, purchase agreements that sell property, and special forms such as installment land contracts. The most tested distinction is exclusive agency, where the owner may sell alone and owe nothing, versus exclusive right-to-sell, where the broker is paid whoever finds the buyer.
Why this matters
The exam describes a listing where the owner sells to a cousin and asks whether the broker is owed a commission, and the answer depends entirely on which listing type was signed.
The college version
In normal terms
- An open listing pays only the broker who produces the buyer; an exclusive agency listing pays the one listed broker unless the owner sells alone; an exclusive right-to-sell listing pays the listed broker whoever sells.
- A net listing lets the broker keep everything above a set price and is discouraged or illegal in many states because it invites the broker to hide true value.
- In an installment land contract, the seller keeps legal title and the buyer holds equitable title while paying; a right of first refusal is only a chance to match another offer.
Concepts in this outline
- Listing agreements — employment contracts between a property owner and a broker that create agency and state how and when the broker earns compensation.
- Open listing — the owner may hire many brokers and sell alone; only the broker who produces the buyer is paid.
- Exclusive agency listing — one broker is hired, but the owner keeps the right to sell alone without owing a commission.
- Exclusive right-to-sell listing — one broker is hired and earns the commission no matter who finds the buyer, including the owner.
- Net listing concerns — the broker keeps all proceeds above a set net to the seller; discouraged or illegal in many states because it invites concealment of value.
- Buyer representation agreements — contracts between a buyer and a broker that create buyer agency and set the broker's compensation and duties.
- Purchase agreements — the bilateral, executory contract of sale stating price, property, closing terms, and contingencies, binding buyer and seller until closing.
- Options — a unilateral contract giving the holder the right, not the obligation, to buy at set terms during a set period (see Topic 07).
- Right of first refusal — the holder's right to match a bona fide offer the owner is willing to accept before the property is sold to another.
- Lease agreements — contracts creating a landlord-tenant relationship and the tenant's right to possession for a term (see Topic 08).
- Lease-purchase agreements — a lease combined with a binding agreement to buy the property later, often crediting some rent toward the price.
- Installment land contracts — contract for deed: the buyer pays in installments and holds equitable title while the seller keeps legal title until paid in full.
- Property-management agreements — contracts in which an owner hires a broker as agent to lease, maintain, and manage income property for a fee.
Eli explains
The same idea, in plain words
Explain it like I’m 10
A listing agreement is an employment contract between a seller and a broker. In an open listing, only the broker who brings the buyer earns a fee. In an exclusive agency listing, one broker is hired, but the seller may sell alone and pay nothing. In an exclusive right-to-sell listing, that broker is paid whoever finds the buyer. A net listing lets the broker keep everything above a floor price and is discouraged or illegal in many states.
A buyer representation agreement creates agency for a buyer. A purchase agreement is the bilateral, executory contract that sells the property. A property-management agreement hires a broker to run income property.
An option gives a holder the right to buy later (see Topic 07). A right of first refusal only lets the holder match an offer the owner will accept. A lease creates a tenancy (see Topic 08); a lease-purchase agreement adds a promise to buy. In an installment land contract, or contract for deed, the buyer pays over time and holds equitable title while the seller keeps legal title.
Worked example
Grace, a licensee in Morristown, lists a colonial for the Delgados under an exclusive right-to-sell agreement. Three weeks in, Hector Delgado's brother offers to buy the house directly, and Hector asks whether that lets him skip the commission. Grace explains that with exclusive right-to-sell, her broker is paid no matter who produces the buyer; only an exclusive agency listing would have let the family sell alone for free. The brother cannot pay all at once, so the parties sign an installment land contract instead: the Delgados keep legal title, the brother takes possession with equitable title, and the deed transfers after the last payment.
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