What is required for a broker to be entitled to receive a commission?

For a broker to be entitled to receive a commission, a signed listing agreement is essential as it establishes the legal relationship between the broker and the seller. This agreement outlines the authority granted to the broker, including the obligation to represent the seller’s interests in the sale of the property. It typically specifies the commission rate that will be paid for successful transactions and formalizes the broker's entitlement to remuneration for their services once the property is sold based on the terms agreed upon in that listing.

While the presence of a ready, willing, and able buyer or an acceptable price and terms can indicate a potential sale, they do not, on their own, guarantee that the broker will receive a commission. Similarly, a binding contract between the seller and purchaser is necessary for the completion of a sale, but without the initial signed listing agreement, the broker has no clear contract establishing the right to a commission for their efforts in facilitating that sale. Thus, the signed listing agreement serves as the foundational document that ensures the broker's entitlement to commission upon the successful completion of a transaction.