Sharing Commission with a Buyer or Seller

Q: I am a buyer’s agent. I want to give part of my commission to my buyer, but I know you can’t pay unlicensed persons a commission, so can I do this?

A: You might be surprised to find that the answer is “yes, under certain conditions.” Although the Licensing Law prohibits the sharing of real estate brokerage fees with  unlicensed persons, the Real Estate Commission takes the position that brokers may rebate or pay a portion of their brokerage fees to buyers and sellers who purchase or  list real estate through the broker, because a real estate license is not required of persons who list for sale real estate which they own or who purchase real estate for their  own account. You should:

  • have the consent of your principal(s) (for example, if you are acting as a seller’s (sub)agent or dual agent and want to share your commission with the buyer, then obtain the  seller’s consent in writing);
  • disclose the payment to the lender; and
  • assure that the payment appears on the settlement statement (failure to disclose the payment on the settlement statement could constitute a “false statement to a lender,”  which is a federal crime and also a violation of the License Law and North Carolina Real Estate Commission rules).

Another example is where you have a transaction pending in which you agree to give the seller back part of your commission. Say that the seller’s employer is relocating him  and will reimburse him for the commission he pays on the sale. Further assume that you are owed $4,000 in commission, but are going to give the seller a $1,000 rebate at  closing. You obtain any necessary consents, but the seller asks that the $1,000 rebate not be shown on the closing statement. He wants the closing statement to show he  paid $4,000. This way, he turns a $1,000 profit, because his company will reimburse him for the amount of commission shown on the closing statement. Can you do this for  the seller? The answer is NO! Do not assist the seller or any other party in furnishing false or incorrect information! As noted above, assure that the payment to the seller  appears on the closing statement.

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Filed Under: Fees/Commissions,