What type of brokerage engagement agreement is prohibited in Georgia?

In Georgia, net brokerage agreements are prohibited because they can create complications regarding the obligation of brokers to fulfill their fiduciary duties. A net brokerage agreement typically involves a situation where the seller receives a fixed amount from the sale of their property, and the broker's commission is anything above that fixed amount.

This type of agreement can undermine the broker's incentive to obtain the highest possible sale price for the seller, as their earnings would depend on the difference between the net amount the seller desires and the actual sale price. Therefore, it raises ethical concerns about misalignment of interests and can potentially violate the broker's duty to act in the best interest of the client.

In contrast, commission-based agreements, exclusive agency agreements, and buyer representation agreements are standard practices within the industry and are not outright prohibited in Georgia. These types of agreements allow for clear expectations regarding compensation and fiduciary responsibilities between the parties involved.