How about something different on this board?

Does anybody have a legal definition for commission?

I'll start..

I keep hearing about companies giving agents 100% commission less the transaction fee, desk fee, franchise fee, under writing fee, etc..etc..

So what is the meaning of commission here?

Then I hear agents pitch they charge x% commission but at closing add another $X in administration fees.

What's the commission here?

What about companies that charge a flat fee to list a house? Is that a setup fee or commission?

How about fsbo companies that charge for signs, and advertising goods? How is this different from a flat fee to list a house? If fsbo companies are charging to advertise shouldn't they be licensed too? Most states have laws requiring any person or entity to be licensed when providing a service for a fee for another. If so where do newspapers stand since they too charnge a fee for advertising and marketing.

How about lawyers that charge a fee to handle the closing? Is that a commission or some other no name fee?

The investors I know charge all kinds of fees: assignment fees, cancellation fees, administration fees, consulting fees. Nearly every one of them have been threatened by an agent to be reported for buying and selling without a license. However since there is nothing illegal about buying or selling without a license I don't know any investor who has been charged, fined or repremanded.

In light of this and the examples you gave of newspapers, FSBO sites, attornies and the like. My conclusion is that commission is also a nothing word, a no name fee. It's just the word used to identify an agent's compensation.

By extension, the definition of an "agent" is someone who pays a fee for a license in order to:
1) Call themselves an Agent
2) Call their fee a Commission

It's got nothing to do with the ability to buy and sell property as illustrated above, which is a commonly held misconception.

Does it really matter what it's called? I don't use the word commission when dealing with a client. I either call it a "fee for service" or "the service fee" when I'm going down a net sheet with a seller.

-J

Realdealer, state laws typically include the words "providing service for fee, for another" as requirement to charge a fee.

By this definition investors are exempt up to the limit as set by law. I'm just curious if there has ever been a lawsuit on this matter because "providing service for fee, for another" doesn't explain fsbo cos, newspapers, websites, sign companies, these people are all providing services for the sale of real estate and charging for their service.


Josh, No name fee is good enough for me. I don't like to use commission either but when people ask what is your commission, anything other than I dont charge a commission is a commission.

I thik it does matter because the industry needs to address these types of issues so we distinguish investors from agents from newspaper fees. It really makes agents look bad when they're out there accusing others like Realdealer for illegal activities without also mentioning that principles are license exempt up to the limit set by each state.

It is also important that we define this since by the current definition, anybody can start charging a fee for services. Asissit2sell charges $3500 to sell a house. Is this a commission requiring a license or a fee like newspaper advertising?

What about all the real estate consultants that charge a fee for their service? Do they need licensing?

Im seeing some new internet models that charge fees for services and products and if there's no definition for "commission" there's going to be a whole lotovem' soon.

Federal courts have already made clear and legal that by owner websites can charge for their listing services on the web so if there's no licensing needed for this and no licensed needed to consult persons selling houses where is licensing needed?

Realtor.com has millions of houses listed and realtor.com is not licensed. MLS networks are not licensed to list houses. Newspapers are not licensed to list houses.

What's next? ABCXYZ realty, no license is needed?

"Commission" traditionally is a percentage of the purchase price, as opposed to a "spiff" which is something like $X per unit sold.

Ever shop at Best Buy? The floorpeople go to great pains to say "we don't work on commission" but you can bet your boots they get paid spiffs and the more they sell, the more they make.

Right. Spiffs are standard practice for extended warranties and other promotions. So are you hinting that it's not a commission if not expressed as a %?

By that definition, Assist2sell and helpusell models are license exempt? Flat fees and fee for service are not require to get a license?

I don't think this arguement holds water because stock brokers charge a fee too ( $10-70 a trade ) and they are licensed. It's not often expressed as a percentage.

This is a serious topic because if realdealer is right then the web is going to be full of fee for service providers soon.

just an example..

http://www.5-daysale.com/

This site sells millions of books for $19.95 on how to sell houses in 5 days.

The web has been kind to them because now they also sell marketing materials and consultation on home selling. They do this nationwide.

Here's the definition of "broker" in the Real Estate and Business Brokers Act of Ontario:

“'broker' means a person who, for another or others, for compensation, gain or reward or hope or promise thereof, either alone or through one or more officials or salespersons, trades in real estate, or a person who holds himself, herself or itself out as such."

And to be a broker requires a license.

One of the exemptions (and there are a lot of them) specifically mentions people who are compensated by something other than "commission".

But there's no definition of what "commission" is.

I got this from one of the most reliable source in the business. You might already know this but "trades in real estate" and "for another or others, for compensation" seems to be what constitutes a commission.

By that definition charge a flat fee for advertising in mls should not requite a license. It's advertising.

Also it would include providing consultation for a fee. Consultation is not real estate.

Not sure I understand the point Jaber

Are you arguing that anyone should be able to list on the MLS ?

May the 4th (be with you) …………. Dave

Dave, the point here is what is a commission? The mls doesn't have to be factored into the discussion.

The point I"m getting at is what's to stop some online companies from charging fees for services? If commission is earned after a sale is made then they simply have to charge a flat fee upfront. AS it is now fsbo cos can charge a fee to advertise as with newspapers. There are also consultants thta charge fees for their services. I know you don't like these lead aggregators so what's to stop them from providing consultations on marketing without getting licensed?

The 4th is with me but you can take the fifth if you'd like.

This is my understanding of what paying a commission means:
"The fee or payment made to a real estate agent/broker for selling your home."
Obviously, a license is required.

Also, let me present the situation that even if we call it a flat fee, isn't it still a commmission because it's a percentage of the sales price, they just happen to charge a larger percentage for lower priced homes and a smaller percentage for higher priced homes? Just some thoughts to chew on...

-J

What if this fee or payment is made to an internet company or advertising company for the sale of a home? Would that considered a commission too?

Perhaps it's only a commission if paid to a real estate agent so if a fee is paid to a non agent then it's not a commission?

Josh, good point but what happens if the same fee is paid to an internet company or consultant? According to federal court rulings websites are exempt from licensing when they advertise properties.

Hmm, good point... to add to that, does that mean for a fee I could offer to lets say, charge FSBO's to advertise their website on my business site, maybe lets say in Yahoo! and in the Real Estate book's website all for a set fee and not take a split with my broker because I am offering that service as a person who doesn't need to be licensed to do so? Interesting... would be nice to know if we legally can, sounds like we can.

-J