Agency 3 - Real Estate Brokerage Compensation
What does it mean "Don't confuse compensation and representation?"
Always do your best regardless of pay
What are the 3 characteristics of broker compensation?
Always negotiable, % of sale price, flat fee.
What is a tying contract?
Forcing you to engage in future business with someone as part of current deal
What is a flat fee?
Happens a lot in land sales or very expensive homes. Very common when you're both helping them sell house and buy a new one?
Bonus to agent
If you get a bonus for selling a certain home, you have to disclose that to buyers (client buyer). That way, they can't say you pushed them into buying this house.
What is always true about a real estate commission?
It is always negotiable
In a transaction with a listing broker and selling broker, who represents whom?
Listing broker = on behalf of seller Selling broker = on behalf of buyer
What are the three characteristics of salesperson compensation?
Negotiable, % of total commission, salesperson's costs. You and the broker decide up front how much of your commission you will share with broker. Generally stays the same.
Can a broker share commission with other people?
Nope - can only be shared between licensees. Cannot share commission with people who referred clients to you (hotel manager, etc.)
How often will you have to pay taxes?
Possibly quarterly. Go to your banker - ask them for help moving forward with your taxes. You'll have a 1099 from here on out.
Sherman AntiTrust Laws
Prevents price fixing - Brokers can't get together and establish fixed commission rates. Even within a brokerage, they can have guidelines but not a fixed %.
How does the commission money flow?
Seller client gives money to listing broker, and listing broker pays salesperson. (You only ever really receive commission from broker.)
What are some salesperson costs?
Signs, business cards, insurance, copies, storing paperwork, lockboxes.
What if a seller will not pay the commission?
The listing salesperson cannot sue the seller directly. They have to have their listing broker go after the seller.
For the sake of the test, who pays the commission to the agent/broker?
The seller. But in reality, the seller always pays it to the listing broker, who in turn pays it to the agent.
When is a brokerage commission earned?
When the agent produces a buyer who is ready, willing, and able that meets seller's terms.
Independent Contractor Agreement
You are not an employee. You set your own hours, pay own taxes, no W-2 because no taxes withheld. 100% money in your pocket - how will you pay taxes at end of year when you get 1099? Ask broker if they have tax advisors.
MLS
multiple-listing service; when brokers share information about properties they have listed. Member brokers agree to cooperate. Commission is shared between listing broker (on behalf of seller) and selling brokers (on behalf of buyer).