Commission and Fees

Real estate commissions are compensation paid for brokerage services.

• Negotiable between broker and principal
• Not fixed by law
• Earned based on contract terms
• Usually paid at close of escrow

• Commission is earned by the broker, not the salesperson
• Salesperson is compensated by their employing broker
• Broker must be properly licensed at time services are rendered

• Broker produces a ready, willing, and able buyer
• Buyer agrees to seller’s terms
• Unless agreement states commission is contingent on closing

• Broker whose efforts directly result in the sale
• Determines commission entitlement when multiple brokers involved
• Common in open listings

• Percentage of sales price
• Flat fee
• Hourly or consulting fee
• Retainer plus success fee

• Only licensed brokers may share commissions
• Salespersons may be paid only by their employing broker
• Fee-splitting with unlicensed persons is prohibited

• Compensation arrangements must be disclosed when required
• Dual agency compensation must be disclosed to both parties
• Referral fees must be disclosed

• Must be disclosed and consented to in writing
• Broker may receive compensation from one or both parties
• Cannot favor one party over the other

• Buyer or seller defaults (depending on agreement)
• Listing expires before performance
• Broker breaches fiduciary duty
• Required disclosures not made