Real Estate · State License Law and Commission

Under most state license laws, who can a salesperson collect a real estate commission FROM?

Correct answer

Only their sponsoring broker — salespersons may not collect compensation directly from buyers, sellers, or anyone other than their broker; the broker collects from the principal and pays the salesperson per their agreement

  1. A Anyone they choose
  2. B Only their sponsoring broker — salespersons may not collect compensation directly from buyers, sellers, or anyone other than their broker; the broker collects from the principal and pays the salesperson per their agreement
  3. C Only the seller directly
  4. D Only the buyer directly

Why this is the answer

This is one of the most universal state license law rules — a salesperson works for and is paid by their sponsoring broker. CHAIN of payment: (1) PRINCIPAL (buyer or seller, depending on representation) is obligated to pay commission per the listing or buyer agency agreement; (2) Commission is paid to the BROKER (not directly to the salesperson); (3) Broker then pays the salesperson per their independent contractor agreement or employment arrangement (commission split, base + bonus, etc.). WHY THIS MATTERS: (1) Salesperson never independently negotiates compensation directly with principals; (2) Provides oversight — broker supervises salesperson; (3) Provides accountability — broker is legally responsible for salesperson's actions; (4) Protects consumers — broker has higher qualifications and bond/E&O insurance. VIOLATIONS: a salesperson accepting commission directly from a principal (bypassing broker) is a license law violation, typically grounds for discipline. REFERRAL FEES: salespersons may NOT pay referral fees to unlicensed persons in most states (a fee to a real-estate-licensed party in a different state IS often allowed). DUAL EMPLOYMENT: a salesperson may not work for two brokerages simultaneously (with very few exceptions). LICENSE PARKED: some states allow 'inactive' or 'parked' licenses for licensees not currently working. STATE-SPECIFIC details vary; the state portion exam tests YOUR state's specific rules on commissions, referrals, and broker-salesperson relationships.
Source: Real Estate State Portion, Compensation Rules

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