What is a service agreement?

• A. A lease agreement between landlord and tenant
• B. A contract for property appraisal
• C. Means an agreement that establishes a relationship between a brokerage and a person which identifies the responsibilities of each party and includes the services to be performed by the brokerage and any compensation payable
• D. A listing agreement only

Answer: (C)

A service agreement is the contract that creates the relationship between a real estate brokerage and a client, and it spells out what the brokerage will do for the client and how the brokerage will be paid. It identifies who is involved, the services the brokerage will provide (such as advising, marketing, showing properties, and negotiating), the responsibilities of the client, the term of the agreement, and the terms for ending the relationship. It also specifies the compensation payable to the brokerage and whether the arrangement is exclusive. This isn’t about leasing a property, a separate contract for appraising a property, or merely a listing agreement for a single property—the service agreement is the overarching document that defines the duties, scope of services, and payment between the brokerage and the client.