In New York and other states, the broker's authority to negotiate a sale, exchange, or lease of real property need not be in writing. In New Jersey and some states however, the statute provides that unless the broker has written authority he cannot recover any commission for making a sale or exchange. There are some localities in which the broker must procure a license or pay a tax.

The ordinary authority of the broker is to conduct the negotiations only. Unless he is a mere middleman, he has a certain amount of discretion and actually represents his employer. His authority does not usually include the right to execute a contract of sale or purchase on behalf of his employer, but he may be given such right. Authority to execute a real estate contract can be given by parol in New York and in some other states. In Illinois, California and others, written authority to sign contracts is required. Although a broker may have signed a contract without any authority to do so, the principal may, if he wishes, accept it and ratify the agent's act. A broker's authority to sign contracts may be inferred from circumstances or a course of dealing or the contract may be ratified by the conduct of the principal.