What is a Real Estate Broker and Their Commission?
Real estate brokers are agents who act as intermediaries or negotiators during the purchase and sale of a home. They are most often charged with bringing a ready, willing, and able buyer to the seller of a home. For their services, real estate brokers enter into different employment contracts with a seller.
Employment contracts for a real estate broker can be written, oral, expressed, or implied. The most common method of payment for a real estate broker is a commission. For example, if a real estate broker brings a ready, willing, and able buyer who purchases a home from a seller at $200,000, then the real estate broker gets a percentage of that purchase price as his or her commission. Commissions can range from 2 to 10 percent, but are generally around 5 or 6 percent. So the commission on a $200,000 home would generally be around $11,000.
What if a Real Estate Broker Can't Get Their Commission?
If a seller refuses to pay a real estate broker the commission they are entitled to, the real estate broker can sue the seller. In order to be successful, the real estate broker must prove that:
- They possessed a proper real estate license,
- An employment contract between the real estate broker and seller existed,
- The terms of the employment contract were performed, and
- The seller is refusing to pay the agreed commission.
What Remedies can be Received?If a real estate broker is successful in proving the above elements, a court can award him or her remedies, which can include: - The commission that was deserved,
- Costs and fees associated with the lawsuit, or
- Punitive damages in some cases.
Are There any Defenses?If a seller is being sued for not paying a real estate broker their commission, there are generally two defenses:
- The real estate broker breached their fiduciary duty to the seller, or
- The real estate broker did not have a proper real estate license at the time of the transaction.
Do I Need an Attorney for my Recovery of a Real Estate Broker's Commission Issue?If you think you have been denied your real estate broker's commission by a seller, or you are a seller who is being sued to recover a real estate broker's commission, it is strongly recommended that you contact an attorney. Only they will be able to explain the issues and help to defend your rights. |
