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Unit 5: Real Estate Brokerage > Compensation & Commission > Flashcards

Compensation & Commission Flashcards

1
Q

Sponsoring broker’s compensation is specified in a contract with the ___.

A

Client

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2
Q

___ and ___ will agree on a compensation rate before agency relationship is established

A

Broker and client

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3
Q

commission, flat fee, or hourly wage are possible forms of ___.

A

compensation

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4
Q

Only a(n) ___ may collect commission in Illinois.

A

sponsoring broker

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5
Q

Tina is a sponsoring broker. Jill is a licensee who is sponsored by Tina. Jill sells a home in Chicago for $180,000 to Joe. Who would be collecting the commission?

A

Tina

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6
Q

Tina is a sponsoring broker. Jill is a licensee who is sponsored by Tina. Jill sells a home in Chicago for $180,000 to Joe. Who is paying Jill her commission?

A

Tina

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7
Q

When a commission is received, it is collected by the sponsoring broker, and then…

A

Distributed to licensees involved in the transaction

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8
Q

If another real estate office “brought in” the buyer, the concept of ___ allows the listing brokerage (working with the seller) to pay the buyer’s brokerage (working with the buyer) the amount of cooperative commission advertised in advance on the multiple listing service (MLS) listing.

A

cooperative commission

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9
Q

Cooperative commission check is issued by the ___ broker’s office to the ___ broker’s office, and checks are then cut by each of those sponsoring brokers to any respective licensees who were directly involved in the transaction.

A

issued by the listing broker’s office to the buyer broker’s office

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10
Q

Tina is a licensee sponsored by Remax, and Joe is a licensee sponsored by Coldwell Banker. Tina represented Joan in listing her home. Joe represented Sarah in purchasing the home that Tina had listed. Who will be responsible for paying Joe’s commission?

A

Coldwell Banker

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11
Q

Tina is a licensee sponsored by Remax, and Joe is a licensee sponsored by Coldwell Banker. Tina represented Joan in listing her home. Joe represented Sarah in purchasing the home that Tina had listed. Who is paying Tina’s commission?

A

Remax

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12
Q

Tina is a licensee sponsored by Remax, and Joe is a licensee sponsored by Coldwell Banker. Tina represented Joan in listing her home. Joe represented Sarah in purchasing the home that Tina had listed. Who will be collecting the commission upon closing of this sale?

A

Remax

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13
Q

Tina is a licensee sponsored by Remax, and Joe is a licensee sponsored by Coldwell Banker. Tina represented Joan in listing her home. Joe represented Sarah in purchasing the home that Tina had listed. Who will Remax be responsible for distributing comissions to?

A

Tina and Coldwell Banker

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14
Q

Tina is a licensee sponsored by Remax, and Joe is a licensee sponsored by Coldwell Banker. Tina represented Joan in listing her home. Joe represented Sarah in purchasing the home that Tina had listed. Can Joe collect a commission from Remax?

A

No

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15
Q

When is commission usually considered as earned?

A

When the work has been accomplished

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16
Q

In Illinois, the ___ is proof that the listing broker earned a commission.

A

closing of a sale

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17
Q

In Illinois, ___ is proof that the broker has produced a buyer and earned a commission.

A

closing of a sale

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18
Q

When the sales or listing agreement specifies no time for the payment of the broker’s commission, the commission is usually earned when completed sales contract has been executed by a(n) ___.

A

ready, willing, and able buyer

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19
Q

When the sales or listing agreement specifies no time for the payment of the broker’s commission, the commission is usually earned when the contract has been accepted and executed by the ___.

A

seller

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20
Q

When the sales or listing agreement specifies no time for the payment of the broker’s commission, the commission is usually earned when copies of the contract are in possession of ___.

A

all parties

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21
Q

To be entitled to a sales commission, an individual must meet which 3 criteria?

A

1) Be a licensed real estate broker
2) Be the procuring cause of the sale
3) Be employed by the buyer or the seller under a valid contract

22
Q

To be considered the ___ of a sale, the broker must have started or caused a chan of events that resulted in the sale.

A

procuring cause

23
Q

If a broker causes or completes an action WITHOUT a contract or without being promised payment, they would be considered as a(n) ___ and may not legally claim ___.

A

considered as a volunteer
may not legally claim compensation

24
Q

Procuring cause disputes between brokers are normally settled through a(n) ___ conducted by the local real estate board or association

A

arbitration hearing

25
Q

Procuring cause disputes between a broker and a client may be settled by a(n) ___ or they may ___.

A

arbitration hearing
or
go to court

26
Q

Procuring cause disputes can not be taken to IDFPR. True or false?

A

True

27
Q

A(n) ___ is one who is prepared to buy on the seller’s terms and ready to take positive steps toward consummation of the transaction

A

Ready, willing, able buyer

28
Q

Once a seller accepts an offer from a ready, willing, able buyer, the real estate broker is entitled to a(n) ___.

A

commission

29
Q

If transaction is not ___, real estate broker may still be entitled to a commission from the seller if the seller’s spouse refused to sign the deed.

A

True

30
Q

If transaction is not consummated, real estate broker may still be entitled to a(n) ___ from the seller if the seller changed their mind and refused to sell.

A

commission

31
Q

If a seller had a mutual agreement with the buyer to cancel the transaction and the transaction was not consummated, is the broker entitled to receive a compensation from the seller?

A

Yes

32
Q

If transaction is not consummated, real estate broker may still be entitled to a commission from the ___.

A

Seller

33
Q

The amount of compensation a licensee receives from a sale is set by mutual agreement between the ___ and ___

A

affiliated licensees and their sponsoring brokers

34
Q

Compensation agreement is included in the ___.

A

employment agreement

35
Q

In Illinois, it is illegal for a sponsoring broker to pay a commission to anyone other than ___ or ___.

A

licensees under the same sponsoring broker,
or to another firm’s sponsoring broker in the case of a cooperative commission

36
Q

Sponsoring brokers may only pay commissions to persons who are…

A

licensed in real estate

37
Q

Sponsoring brokers may either pay their licensees directly, or to a(n)…

A

entity formed by the licensee (LLC) for the purpose of receiving compensation

38
Q

The Real Estate Act of 2000 permits sponsoring brokers to pay commissions to an LLC that was formed by a licensee for the purpose of receiving compensation. True or false?

A

True

39
Q

If a licensee forms an entity for the purpose of receiving compensation, the entity MUST be licensed. True or false?

A

False
The entity can NOT be licensed

40
Q

A licensee may use their entity to perform real estate activities. True or false?

A

False

41
Q

A licensee may advertise their entity to the public. True or false?

A

False

42
Q

Entity (LLC) formed for the purpose of receiving compensation may only receive compensation earned by…

A

the licensee

43
Q

If a licensee forms an entity (LLC) to receive compensation, earned compensation may be from real estate or ___ activities.

A

non real estate

44
Q

If an entity formed by a licensee for the purpose of receiving compensation is jointly owned with their spouse, then their spouse must either be ___ or ___.

A

1) licensed under the same sponsoring broker as their spose
or
2) not licensed

45
Q

In a cooperating transaction commission is paid by the sponsoring broker of the “___ side” to the listing broker on the “___ side” of the transaction.

A

Paid by the sponsoring broker of the listing side (selling side) to the listing broker on the buyer side of the transaction.

46
Q

Who pays compensation to sponsored licensees in a cooperating transaction?

A

Sponsored brokers will pay compensation to their own licensees

47
Q

___ are normally stated as “Co-op X%” on the MLS sheet

A

Cooperating transactions

48
Q

Sponsoring broker’s compensation and policy with cooperating brokers who represent other parties in a transaction must always be…

A

disclosed in writing

49
Q

If compensation related to a transaction has been received by a third party, this needs to be ___.

A

disclosed

50
Q

Sarah was a licensee who had sold Lisa’s house while sponsored by Remax. Sarah had voluntarily terminated her sponsorship with Remax 1 day before Remax had collected the commission and her license is now being sponsored by Berkshire Hathaway. Who will will Remax pay a commission to?

A

Sarah

51
Q

Sarah was a licensee who had sold Lisa’s house while sponsored by Remax. Sarah had voluntarily terminated her sponsorship with Remax 1 day before Remax had collected the commission and her license is now being sponsored by Berkshire Hathaway. Who will be paying Sarah her commission?

A

Remax

52
Q

Sarah was a licensee who had sold Lisa’s house while sponsored by Remax. Sarah had voluntarily terminated her sponsorship with Remax 1 day before Remax had collected the commission and her license is now being sponsored by Berkshire Hathaway. Who will Berkshire Hathaway need to compensate for this transaction?

A

Nobody, Berkshire Hathaway was not involved in this transaction

Unit 5: Real Estate Brokerage (9 decks)

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