Since the law does not set exact parameters on what they should or should not, including consignment contracts must be very rigorous in their preparation to ensure fair payment of the commission.
In accordance with current regulations, it is possible to agree and relate in a document the conditions, commitments and duties between the property owners and the real estate agents, in their capacity as intermediaries to promote the properties and ‘get’ the client for the closing of the business.
And although this document guarantees an ‘equitable’ commercial relationship for both parties, it is more of a way – insurance – so that agents are not victims of non-compliance in the total or partial payment of the commission by the offer.
Keys to get paid the commission
Eye. However, due to the lack of clear legislation on this issue, many times even this contract does not guarantee the payment of commissions, but at least it reduces the chances of agents being scammed. What will really make possible the recognition of the payment for the management that they carry out is their experience and the tact with which they handle each business.
In any case, it is essential that when a real estate agent receives a property on consignment -for sale- signs this consignment contract in which the owner’s data, the characteristics of the property, the amount of the commission, the trading conditions, commission payment times and the respective compliance clauses. This will also allow you to freely show the properties and avoid possible suspicions on the part of potential clients.
After that happens, every time the agent introduces a client to the owner, they must send him a letter and have him sign the respective ‘receipt’. The purpose of this letter, in which the date is stipulated and reference is made to the consignment document and its conditions is to demonstrate to the corresponding authorities the right to recognition of its commission, in case of any breach on the part of the owner.
Classes of consignment contracts
Now, regarding the consignment contract in the market, two classes are used:
1) Exclusive consignment contract. It is a document with which the owner is only obliged to pay the commission when it is the real estate agent who gets the client and obviously, fulfils his advisory work in the proceedings of the case from the promise of sale until it is agreed. Run in full.
In addition, it gives the owner the freedom to consign his property in other real estate agencies or to sell it directly without this having any repercussions. However, in this type of contract, the owners must assume the advertising or promotion expenses that the real estate agent will incur to sell the property. Generally, the agents collect this money – based on a rate and an advertising plan established in advance – at the moment of signing the consignment document.
2) Exclusive consignment contract. Through this document, the real estate agents agree with the owner that they will be the only ones authorized to promote and sell a property. Thus, if for some reason the owner is the one who gets the client, he will still be obliged to pay the commission to the real estate agent. This also prevents the owner from going to other real estate agents, among other possibilities.
Now, when signing an exclusive consignment contract, the owner wins in the sense that he should not invest in advertising or expenses derived from the promotion of the property, but it is the real estate agent who assumes these costs, so in ‘consideration’ asks for exclusivity in representation.
In both cases, the duration of the contracts ends with the sale of the property by the agent and the respective payment of the commission by the owner. Similarly, the parties may stipulate a duration date for the consignment contracts (with or without exclusivity) that can range from one month to one year (or as long as it is considered necessary, which may be longer).