When is a real estate broker allowed to receive a commission?

When is a real estate broker allowed to receive a commission?

• A. Only after the closing of the sale.
• B. When a deal is verbally agreed upon.
• C. Only upon securing an offer to purchase.
• D. When required by law.

Answer: (A)

A real estate broker is allowed to receive a commission only after the closing of the sale because this is when the transaction is officially completed, and ownership is transferred from the seller to the buyer. The closing process includes finalizing all necessary documents, addressing any contingencies, and ensuring that all parties fulfill their obligations as per the contractual agreement. This is crucial because the commission is typically a percentage of the sale price, which is only established once the transaction is finalized. Receiving a commission prior to closing could expose the broker to liability, as there is no guarantee that the sale will successfully complete. While a broker may perform services or facilitate discussions before closing, the legal and financial obligations associated with receiving a commission are distinctly tied to the successful closure of the real estate transaction.

A real estate broker is allowed to receive a commission only after the closing of the sale because this is when the transaction is officially completed, and ownership is transferred from the seller to the buyer. The closing process includes finalizing all necessary documents, addressing any contingencies, and ensuring that all parties fulfill their obligations as per the contractual agreement. This is crucial because the commission is typically a percentage of the sale price, which is only established once the transaction is finalized.

Receiving a commission prior to closing could expose the broker to liability, as there is no guarantee that the sale will successfully complete. While a broker may perform services or facilitate discussions before closing, the legal and financial obligations associated with receiving a commission are distinctly tied to the successful closure of the real estate transaction.