Real estate brokers and office managers are responsible for reviewing contracts originated by real estate agents who work under their supervision. This week’s real estate question regarding the Reviewed by signature block on standard real estate forms relates to an important facet of that supervision.
“I see a ‘Reviewed by _____’ signature block at the bottom of every real estate form I signed with my agent when I listed my house for sale. Who signs on that line?” A.F., Sacramento, CA
The Reviewed by line (circled in blue above) is usually printed at the bottom of the last page of most standard real estate forms. It is signed or initialed by your agent’s supervising broker or office manager after they review all the forms that you and your agent have signed. Review by the broker or manager is important. First, the review makes sure that the documents have no clerical errors and all signatures and initials are in place. Second, the listing agreement could be cancelled by the broker if they find listing terms they consider unacceptable. This is rare, but possible. Let’s look at the warning to sellers contained in the standard California REALTOR® residential listing agreement:
“17. MANAGEMENT APPROVAL: If an associate-licensee in Broker’s office (salesperson of associate-broker) enters into this Agreement on Broker’s behalf, Broker or Manager has the right to cancel this Agreement, in writing, within 5 Days after execution.”
If this form or another form with a similar statement is used, it means the Broker can cancel the listing within the stated number of days – just when seller and agent are beginning to sell the property. I recommend that sellers not wait the number of days specified to know if the supervisor has approved their contract. Follow up with the agent within 24 hours to make sure the broker has reviewed and approved the listing agreement.
Why would a broker cancel a listing agreement? It seldom happens, but here are examples:
- Commission amount is incorrect.
- Broker discovers that the property was previously listed for sale with another broker and that broker still has a valid claim to a portion of the sales commission.
- Contract requires services not normally provided by the Broker that puts the Broker at risk (e.g. inspection services normally provided by a licensed property inspector).
- Without pre-approval by the Broker, the agent has obligated the Broker to provide and pay for marketing services not normally provided by the Broker.
- Broker disagrees with sales strategies contained in the agreement, such as the initial listing price.
Not all forms with a Reviewed by line are subject to cancellation. Ask your agent to explain each form you sign and their office’s procedures for review and approval.
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NOTE: Real estate questions are answered within the scope of real estate broker expertise and no legal or tax advice is provided. Contact a qualified legal or tax professional for questions regarding those issues.
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