An oral brokerage agreement refers to a binding agreement between a real estate broker and their client, which is made through an oral agreement instead of a written one. While there is no formal record of the terms of the agreement, it is still legally binding if all parties agree to the terms.
An oral brokerage agreement can be established by a simple conversation between the broker and the client, in which they both agree on the terms of the contract. The terms of the agreement can be related to the duration of the contract, the fees payable to the broker, the scope of the broker`s duties, and any other relevant aspects of the agreement.
One of the main advantages of an oral brokerage agreement is that it is a flexible and straightforward way of contracting, especially in cases where time is of the essence or when a written agreement might not be practical. Additionally, if the broker and the client have a good relationship and mutual agreement, an oral agreement may be easier to implement and enforce.
However, one of the significant disadvantages of oral brokerage agreements is the risk of misunderstanding or miscommunication. Because there is no formal document that outlines the terms of the agreement, the broker and the client might have different interpretations of what was agreed upon.
Furthermore, if there are any disputes between the parties, it will be difficult to prove what was agreed upon or to enforce terms of the agreement in court. As such, it is always advisable to have a written brokerage agreement, even if it is a basic one, to ensure clarity and to avoid any potential conflicts.
In conclusion, an oral brokerage agreement is a binding contract between a real estate broker and their client, made through an oral agreement instead of a written one. While it may seem like a straightforward and flexible way of contracting, it is not recommended due to the risk of miscommunication and difficulty enforcing the terms of the agreement. Therefore, it is always advisable to have a written brokerage agreement to ensure that all parties understand and agree to the terms.