Compensation & Commission Flashcards
Sponsoring broker’s compensation is specified in a contract with the ___.
Client
___ and ___ will agree on a compensation rate before agency relationship is established
Broker and client
commission, flat fee, or hourly wage are possible forms of ___.
compensation
Only a(n) ___ may collect commission in Illinois.
sponsoring broker
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?
Tina
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?
Tina
When a commission is received, it is collected by the sponsoring broker, and then…
Distributed to licensees involved in the transaction
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.
cooperative commission
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.
issued by the listing broker’s office to the buyer broker’s office
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?
Coldwell Banker
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?
Remax
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?
Remax
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?
Tina and Coldwell Banker
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?
No
When is commission usually considered as earned?
When the work has been accomplished
In Illinois, the ___ is proof that the listing broker earned a commission.
closing of a sale
In Illinois, ___ is proof that the broker has produced a buyer and earned a commission.
closing of a sale
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) ___.
ready, willing, and able buyer
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 ___.
seller
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 ___.
all parties
To be entitled to a sales commission, an individual must meet which 3 criteria?
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
To be considered the ___ of a sale, the broker must have started or caused a chan of events that resulted in the sale.
procuring cause
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 ___.
considered as a volunteer
may not legally claim compensation
Procuring cause disputes between brokers are normally settled through a(n) ___ conducted by the local real estate board or association
arbitration hearing
Procuring cause disputes between a broker and a client may be settled by a(n) ___ or they may ___.
arbitration hearing
or
go to court
Procuring cause disputes can not be taken to IDFPR. True or false?
True
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
Ready, willing, able buyer
Once a seller accepts an offer from a ready, willing, able buyer, the real estate broker is entitled to a(n) ___.
commission
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.
True
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.
commission
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?
Yes
If transaction is not consummated, real estate broker may still be entitled to a commission from the ___.
Seller
The amount of compensation a licensee receives from a sale is set by mutual agreement between the ___ and ___
affiliated licensees and their sponsoring brokers
Compensation agreement is included in the ___.
employment agreement
In Illinois, it is illegal for a sponsoring broker to pay a commission to anyone other than ___ or ___.
licensees under the same sponsoring broker,
or to another firm’s sponsoring broker in the case of a cooperative commission
Sponsoring brokers may only pay commissions to persons who are…
licensed in real estate
Sponsoring brokers may either pay their licensees directly, or to a(n)…
entity formed by the licensee (LLC) for the purpose of receiving compensation
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?
True
If a licensee forms an entity for the purpose of receiving compensation, the entity MUST be licensed. True or false?
False
The entity can NOT be licensed
A licensee may use their entity to perform real estate activities. True or false?
False
A licensee may advertise their entity to the public. True or false?
False
Entity (LLC) formed for the purpose of receiving compensation may only receive compensation earned by…
the licensee
If a licensee forms an entity (LLC) to receive compensation, earned compensation may be from real estate or ___ activities.
non real estate
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 ___.
1) licensed under the same sponsoring broker as their spose
or
2) not licensed
In a cooperating transaction commission is paid by the sponsoring broker of the “___ side” to the listing broker on the “___ side” of the transaction.
Paid by the sponsoring broker of the listing side (selling side) to the listing broker on the buyer side of the transaction.
Who pays compensation to sponsored licensees in a cooperating transaction?
Sponsored brokers will pay compensation to their own licensees
___ are normally stated as “Co-op X%” on the MLS sheet
Cooperating transactions
Sponsoring broker’s compensation and policy with cooperating brokers who represent other parties in a transaction must always be…
disclosed in writing
If compensation related to a transaction has been received by a third party, this needs to be ___.
disclosed
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?
Sarah
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?
Remax
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?
Nobody, Berkshire Hathaway was not involved in this transaction
