Entry by Don Gockel

Contracts and etc.


I am disappointed in the fact that I have scoured this site and can learn nothing about creating a contract. Being in California I would ideally like to find at least one of the 409 ACRE© graduates that does business here that would share the contract they use when a client decides to use their service. I am not one that will go off half-cocked and offer this type of service until I have things in place and a contract seems to be a necessity so I am sure most ACRE's© have one.



Don, When working with sellers, I always used an addendum to the standard purchase and sale which laid out specifically, what services were included, what were NOT included and how they would be paid for. My addendum was looked over by an attorney as was a contract that I used with buyers and homeowners.

The reason that we do not have published contracts is because each state and province is different and we don't want to run the risk of taking our "sample" contracts and running with it. Having said that, I do hope one of our CA ACREs will share. In the meantime, perhaps consider writing up a sample contract and running it by an attorney to make sure that it adheres to CA law.

One more thought Don: I understand your frustration - when I started consulting I had no ACRE. I had to create EVERYTHING from scratch. So, whatever we have now is a great improvement. As we grow, hopefully we will have more and more resources to draw upon.

I took the State form and scanned through ACR (whatever that means? it digitizes the scan and drops it into NotePad or MS Word.

Then I edited that into a contract which suited my menu of consumer choice. I also remembered to add the hedge clauses. such as the buyer rep agreement

Compensation : The parties agree that Broker will receive a commission from seller, seller agents or other brokers. Upon Broker receipt of those commissions, Broker will rebate  ______________%  to Buyer, to the extent that it is permissible by law, title companies, lenders, and governmental agencies.  Rebates are subject to consent of parties represented ( as required by state law.)

Buyer will pay Broker start up engagement fees (not refundable to buyer) in amount of   $_______________________________________________________________ ,

which ( check one ) (    )  will (   ) will not be credited to Buyer at closing when Broker receives commissions.


I also scanned and ACR digitized the listing agreement and made necessary changes to the compensation paragraph.


I use a standard PAR agreement and write an addendum stating what is included in my services/fees

Lester that's Ocr (optical character recognition) and thanks for the idea. I am curious, don't you have problems with lenders rebating money to the buyer? I thought FHA loans do not allow any money to go the buyer at or after the close. My plan is to just use the commission towards the buyers closing costs.

Very astute to ask the question. There are several answers.

I currently primarily sell commercial properties which have fewer lending regulations since the loans are not government guaranteed. I suspect that the rebate can be used liberally in commercial deals

Some deals are all cash without loans.

Some deals are seller financing only.

However if a residential property does require a loan, please note that my buyer agreement states that the rebate is subject to laws and lender regulation. There are ways to see that the rebate is used to the fullest by the buyer.

Texas is a minimum services state, meaning that if I represent a buyer or seller, I am required to perform a certain minimum of service to provide reasonable responsible fiduciary tasks and obligations. I gotta look out for the client, therefore I have a minimum fee of approx $4,000. 

To get there, I usually offer to rebate only 50% of my commissions and my guideline is to rebate $5 for each $1 they pay in advance as a start up fee (non-refundable but credited to them at closing)

As an example, if they expect to buy a $400,000 home and the expect commission is 3% = $12,000.  Then I offer to rebate $6,000 of they pay $1,200 in advance when they sign the buyer rep agreement, thus the rebate is $6,000 and at closing I repay their $1,200 plus $6,000 rebate.

Please note that I am currently doing this for commercial properties and expect to do it also on residential homes.

So for residential homes, I have researched and spoken with many people.

The buyer can use your rebate for loan related expenses. Mortgage fees are approx 1% which could be $3,200 in this example. 

Also the borrower could buy down the loan with the other $2,800. 

It can also be used for other lender fees and even maybe even courrier fees.

I have not yet done this, but have carefully spoken with others. 

Glenn Freezman (Nucazza.com) and I have discussed this and maybe he will chime into this discussion.  If the rebate exceeds the amount loan related expenses, then the remainder difference can be used to pay down the loan.

As last resort I can ask the seller to reduce the price by the amount of the unused rebate, in exchange for seller reduced commission.  

I am going to stay attune and on top of these expenses and have advance good dialogue with the loan broker.  The loan broker will need to know how much the buyer expect to get in rebate.  Of course we will disclose the rebate in the purchase contract to be sure to completely disclose to all parties.

Am not sure, but maybe rebate can be used for lender required hazard insurance.

As last resort, buyer can use the rebate to pay down the loan.

Redfin.com has been giving rebates for several years. They actually write a letter to the lender.

I expect to be very forthright with buyer and have advance discussion about how I expect the buyer to use the rebate and my wish to use best efforts for buyer to fully use the rebate, but there is the possibility that as last resort, buyer may not reduce the price in exchange for reduced seller listing commission.


Hi Don,

I’m not sure how others handle this, but I don’t use a separate contract for listings when doing partial fee based and partial commission.  In our Arizona Listing Agreement there is a section under Compensation to Broker called Retainer where an amount can be entered.  The language says “Broker acknowledges receipt of a non-refundable retainer fee of XXXX payable to Broker for initial consultation, research and other services.”  This is where I enter the upfront fees that I have collected.  I also give a copy (after they agree to sign with me) of the agreed upon “Seller Smart Plan” that we go over in the listing appointment.  I have received upfront fees on all “normal” listings since 2008.  With that said, our market is mostly short sales right now.  Prior to the MARS ruling, I collected an upfront fee on short sales too.  Since the MARS ruling, I have not collected upfront fees on short sales.  I haven’t had any Sellers do a 100% consulting arrangement yet.  If I did, I would call the Seller Smart Plan an addendum and reference the attached addendum in the Additional Terms of the listing agreement.

I hope this helps.

Stacy Erickson

Make sure you check your state laws when it comes to using OCR and changing the contracts.  In Wisconsin that would be cause to lose your license forever and big fines.  That is considered practicing law in our State.  We can enter information in the blanks, but you may not alter the wording of a state published form.

Here in the compensation section, we would write see (Addendum # ).  The addendum can be drafter by you to state you commission agreement and it is now part of the contract.

In Texas, principals can change wording of promulgated state forms, but agents, who are not party to the transaction, can not alter the state promulgated forms.  As a broker, I am a principal, to the listing agreement contract between the consumer and the broker. (I always spell principal, wrong). So parties to a contract may write their own contracts.

In Wis you would be the broker or agent representing a principal.  Not a principal and only principals or attorney's may alter a state form.  Thus we use one of the blank lines to reference the addendum regarding (commission or what ever) as being part of the agreement.

If there is a contract between a brokerage firm and a property owner, then both are principals to the listing contract.

I believe in AZ, the AAR states somewhere that their contract is copyrighted, therefore, one cannot alter the wording of the contract by the OCR method.

They can line out sentences or clauses, or write additional terms and addendums, but not alter the contract.

There is one line in the Buyer Broker Agreement that I would like to alter and remove, instead of lining out and initialing, but due to the copyright I can't do that.

Other state Realtor assotiations may have the same copyright, so it may be wise to double check before altering a contract.



This page contains a single entry by Don Gockel published on October 10, 2011 7:15 PM.

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