A Brief Introduction of One Time Showing Agreement
In a one time showing agreement, the real estate broker and the property owner enter into an agreement to sell the property. They’ll provide a list of prospective clients who might be interested in the property, and the broker will pitch the sale to them. If any of the clients purchase the property, then the broker is paid a commission.
The seller has to pay the commission on behalf of the buyer as well. A broker will not approach a For Sale By Owner or FSBO seller because they will not get any commission there. Since most buyers use an agent, the seller needs to enter into this agreement to sell the property. The broker is granted permission to show the property to prospective customers.
Who Takes the One Time Showing Agreement?
There are 2 parties to the One Time Showing Agreement, the real estate broker and the owner or legal representative of the property. The broker provides a list of the names all the prospective clients and gets a commission if one of those clients purchases the property.
Purpose of the One Time Showing Agreement
The sale of the property is handled mostly by commission agents. The broker or commission agent has access to a number of clients and agrees to connect the seller and the buyer for a commission. The purpose of the agreement is to mention that the buyer can showcase the property only once during the paperwork. All the clients that the broker wishes to show the property are named in the agreement. In selling the property, the seller acknowledges that he is the owner of the property and has the authority to legally represent himself as the owner.
By entering into an agreement with the buyer, the seller promises to pay the broker a commission if he makes a sale. The purpose of this agreement is to enlist the services of the broker so that the owner does not have to list the property himself or put the house up on an FSBO offer. For selling the property, a buyer requires compensation. The seller also pays the commission on behalf of the buyer.
The seller gets access to the broker’s client database which would otherwise not have been possible. The dual commission that the buyer receives from the seller acts as an incentive.
Contents of the One Time Showing Agreement – Inclusions
The contents of One Time Showing Agreement can be determined by referring to a one-time showing agreement form that is available online.
Here is the information that should be included in such agreements:
- Names of the parties to the agreement, the seller and the broker
- The details and the description of the property must be mentioned in the property so that it doesn’t create confusion at the time of sale
- Rights granted to the broker for showing the property to his clients
- A declaration that the seller is the owner or legal representative of the property
- Seller’s obligations shall also be included as part of the contract. A seller is obligated to convey to the buyer any new pertinent or relevant information. He shall provide for all inspections, cooperate with the buyer in selling the property as well as surrender titles or copies for property visitations. This may include insurance as well.
- The start and the end date of the agreement
- Deciding compensation is usually done by the broker and the client on a case-to-case basis without any prejudice for sale. Since this is a compensation agreement and not an agreement to list the property appropriately, the ultimate goal is to decide the compensation payable to the broker.
- The commission in percentage terms payable to the broker
- Governing laws for the agreement
How to Draft the One Time Showing Agreement?
While drafting this agreement, you can download a one-time showing agreement pdf and see the clauses and make necessary modifications. A standard one time showing agreement template contains
- Acknowledgment from the seller that the contract is for compensation and not listing of the property.
- An acknowledgment from the seller that the broker is not his agent and either acting in his independent capacity or on behalf of the buyer.
- Permission from the seller to make public information about the sale and its terms on multiple listing sources
- Buyer’s acknowledgment that this contract does not give him the authority to manage the property for rent or maintenance.
- Obligations of the seller including providing relevant information, furnishing relevant documents, paying fees for inspection, providing insurance and other documents, taking responsibility for maintenance and utility, and cooperating with the broker in selling the house
- Determination of the compensation to be paid to the broker for his services and whether such compensation should be collected from the seller on behalf of the buyer
- The activity after which the broker becomes eligible for compensation
- Acknowledgment from the seller that the broker is eligible for compensation if the seller contracts another listing service for selling the property
- An assignment from the seller for an amount from the gross proceeds of the sale equivalent to the compensation payable to the broker.
- Neither party has expressed reservations or opinions about the legal effects of the closing documents
- Any additional costs that may be incurred shall be borne by the seller for closing the sale
- Indemnification clauses for any loss caused to the seller or to any efforts by the broker shall be suitably compensated.
- An acknowledgment from the seller that he shall abide by fair housing policies and shall not show any discrimination.
- That the property has not received any notices from any municipalities or governments in connection with any disputes.
The broker will negotiate the commission payable for the sale depending on the location of the property and the condition. The seller can make a counteroffer regarding the commission payable and then a mutually agreed commission can be decided and stated in the agreement.
Benefits & Drawbacks of the One Time Showing Agreement
The benefits of a one-time showing agreement are:
- Protection of interest of both parties: The broker will get his or her commission if the property is sold before a certain date and bought by one of the named clients.
- The incentive for broker: The broker gets the buyer’s and the seller’s commission on the sale of the property
- Access to more buyers: The seller has wider access to buyers who are the broker’s clients.
The drawbacks of a one-time showing agreement are:
- No assurance of commission: Until the house gets sold, the broker can’t get his commission. Because there is no guarantee of an immediate sale, there is no guarantee or commission.
- Difficulty to sell the property: Without suitable network or without a high volume of buyers with an intent to purchase, it becomes hard to sell the house and honor the contract.
What Happens In Case of Violation?
In case of violation of a one-time showing agreement, both parties may approach arbitration for resolution of disputes. If arbitration does not work out, then they may approach a court of law that might offer legal recourse to the injured party. This recourse can be in the form of paying damages, restitution(1), forced compliance or a settlement between the parties.
However, if a contract has been made through fraudulent representation, then the injured party can seek an injunction or other legal recourse to be compensated for spending his resources on the contractual obligations. If the parties want to, without any prejudice to any provision contained in the contract, it may be terminated.
One-time agreement ensures that a seller gets his property listed and sold while a broker earns his commission. If done properly, this agreement can help in developing a good relationship between the parties and thereby bringing in the highest offer due to goodwill efforts of the broker. However, both parties should carefully peruse the contract to ensure all their interests are protected.