What is a "brokerage agreement"?

A brokerage agreement is fundamentally a contract between a broker and a client that outlines the specific terms of representation. This agreement establishes the legal relationship and obligations between the broker and the client, typically detailing the scope of services the broker will provide, the duration of the relationship, and any compensation or fees that may be involved.

The clarity and formal nature of a brokerage agreement ensure that both parties understand their rights and responsibilities, making it a critical document in real estate transactions. Such agreements are essential for protecting the interests of both the broker and the client, ensuring that the broker has the authority to represent the client in real estate matters effectively.

While other options may involve various aspects of real estate transactions, they do not capture the essence of a brokerage agreement. For instance, a contract between brokers regarding property listings does not pertain to a specific client and lacks the direct client representation element. A simple handshake agreement does not provide the legal protections or detailed obligations that a formal brokerage agreement contains. Finally, an agreement for managing properties refers to property management agreements, which are distinct from the roles and responsibilities defined within brokerage agreements.