Employment Contract for Real Estate Agencies

What a good one includes

• A highly detailed commission schedule that specifies split percentages, desk fees, transaction fees, and exactly how and when commission is paid out upon closing.
• A clear clause defining ownership of the Customer Relationship Management (CRM) database, specifying that client leads generated under the brokerage remain the property of the agency.
• A transition protocol detailing how pending escrows and active listings will be managed and compensated if the agent departs the agency.
• A requirement for the employee to maintain active real estate licensure in good standing and adhere strictly to local MLS rules and Realtor codes of ethics.
• An explicit breakdown of who covers specific operational costs, including marketing materials, signs, board dues, lockboxes, and continuing education.
• A protective covenant preventing departing staff from recruiting other agents or taking proprietary agency data, marketing strategies, or uncontracted clients to a competitor.

Common mistakes to avoid

• Classifying a worker as an independent contractor in the agreement while treating them like a traditional W-2 employee, which violates labor laws and risks heavy tax penalties.
• Failing to specify how pending commissions are handled after termination, leading to expensive and bitter post-departure disputes over closing deals.
• Neglecting to define who owns the client data in the agency CRM, allowing departing agents to wipe databases or walk away with valuable prospect lists.
• Using a generic, one-size-fits-all employment template that ignores state-specific real estate commission laws and local brokerage disclosure requirements.

Frequently asked questions