Question

An owner agrees to pay a broker for procuring a tenant unless it is the owner who finds the tenant. This is an example of a(n)

a) Exclusive listing agreement
b) Open listing agreement
c) Net listing agreement
d) Gross listing agreement

Answer 1

The scenario described where an owner agrees to pay a broker for finding a tenant unless the owner finds the tenant themselves refers to an open listing agreement. This arrangement allows the property owner flexibility in finding tenants without commitment to a single broker, potentially saving on commission fees.

Step-by-step explanation:

The arrangement described in the student's question is an example of a open listing agreement. In an open listing, the property owner reserves the right to sell the property themself or through multiple brokers. Unlike an exclusive listing agreement, where the owner agrees to work with only one broker, the open listing agreement allows the owner to avoid paying the broker's commission if the owner finds the tenant themselves.

An open listing agreement benefits the owner by providing flexibility and the potential to save on commission fees. The downside for the broker is the lack of exclusivity, which may result in less effort being put toward marketing the property compared to an exclusive listing agreement, where the broker is guaranteed a commission if the property is rented.