February 2012 Letters to the Editor
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Question: Can a licensed broker or sales agent purchase a property as a principal and receive a brokerage fee on the sale?
Answer: First, a basic rule: A real estate licensee who acts solely as a principal when buying or selling property need not disclose the existence of his real estate license; he is not acting in the capacity of a licensed broker (or a licensed agent employed by a broker) in expectation of a fee.
However, a licensee (broker or agent) acting solely as a principal who does not immediately disclose to all parties involved in the transaction his intention to use his licensing status to share in the broker fees upon his first inquiry for more property information may not later demand a fee on the sale.
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About The Author
ft Editorial Staff
is the writing staff comprised of legal editor Fred Crane, In-House Broker Consultant Fernando Nunez and writer-editors Connor P. Wallmark, Giang Hoang-Burdette, Jeffery Marino, Carrie B. Reyes, Sarah Cantino, Matthew Taylor and Matthew Shade.
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Whether to take a commission when acting as a principal in a purchase? That is the question that was asked above. Say it is a $500,000 purchase with 50/50 split of a 6% listing. The selling broker would be entitled to a $15,000 commission in a normal transaction. If I were the selling broker and the listing broker and the seller would agree to this idea? Instead of taking a $15,000 commission that would be subject to income taxes and self employment taxes, why not have the seller reduce the price by $15,000, pay the selling broker a full $15,000. If the seller would have to pay any taxes on the sale of the property, that would reduce his ultimate tax liability. Now I have never heard of this being done and I am not sure if it would fly by the IRS and FTB but it MIGHT be a way to reduce taxes for the seller AND the Broker buyer? Correct me if I am wrong?
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Hey! The answer is YES – as long as it is disclosed.
Jeez! 16 paragraphs to answer a simple question.
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You can go to meet with a local agent, but do not expect mlrecias. They do not make the final decisions themselves. They submit your application to the insurance company, which is located somewhere else, and makes the decision. You still have to wait the same amount of time (longer if the agent is slow to send the application), and you are just as likely to be rejected. The agent cannot give you a counter-offer, for the simple reason that the agents cannot make, accept, or reject any offers; they just process paperwork for an insurance company located elsewhere which makes all the decisions. The only difference is that agents use handwritten forms, and if the insurance company cannot read your handwriting, then you will have to wait longer or redo the form. Websites have you type everything, so there are no handwriting problems.Before the Internet, they were turned down, they were not given counter-offers, and they had to wait much longer than day/weeks. They had to wait for months, and they still got the same result.
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