It's the Rule

by: President & CEO Terese (Terry) Penza, CAE, RCE, e-Pro

For some reason agents seem to think that since they have a real estate license that means they can find a buyer for a property any where in the world and receive half the commission. Let’s break down this statement and see the errors.

1. First, a real estate agent cannot receive compensation from anyone other than their sponsoring broker. The amount of money the sponsoring broker gives an agent is spelled out in the Independent Contractor contract signed between the agent and the sponsoring broker. The broker is paid all monies and then out of the goodness of his heart or by Independent contract does the agent get paid.

2. A broker cannot pay an agent unless the agent has a current, valid real estate license and is sponsored by that broker. To check to see if the State of Illinois received the proper paper work you can go to their web page to check out http://www.obrelookupclear.state.il.us/default.asp and make sure under “Division” you select “Real Estate” which will reveal the agent AND the sponsoring broker.

3. To receive a commission you must hold a real estate license with the state that the property is located. You may receive a referral fee. Let’s say some broker in California lists and sells a property in Illinois and the owner refuses to pay the California broker – the California broker couldn’t even go to court because he has no standing because he is not licensed in Illinois.

4. You can only earn a commission on property that the listing office offered cooperation and compensation to YOU! Even in the Code of Ethics NAR acknowledged there is a difference between cooperation and compensation. The Code of Ethics states that REALTORS® can assume that the REALTOR® office will cooperate with you unless stated otherwise but this has NOTHING to do with compensation!

5. If your office is a member of a Multiple Listing Service and the property you wish to sell is in that same MLS then cooperation AND compensation has been offered to you – that is what MLS means – an agreement of cooperation and compensation. However, if the property is NOT in a MLS that your office belongs or if you are not in an MLS where the property is listed then there has been no offer of compensation! You may ask and then the listing office can decide. Of course, whatever policy that listing office has on compensating those outside the MLS they FIRST revealed that to their principal BEFORE the principal signed a contract with them.

6. So, to make sure you get paid for your work, call the listing office and ask tow questions, 1) may I show the property 2) and if I sell the property how much do I make.

7. Don’t force your commission into the sales contract. Since the sales contract is just between the buyer and the seller you don’t even have a standing in the agreement. See an attorney.