BIC TIP #1282: Compensation Is Not Always Money
Compensation is not always money. In this BIC TIP, Stephen Long reminds brokers that anything of value you receive for your real estate services is compensation, and it needs to be disclosed in writing in your listing agreement.
Most of the Time, It Is Money
For most brokers, listing and selling property happens in exchange for money. That makes sense. We like money, because money pays the bills.
But not every deal works that way, and that is where brokers need to be careful.
Equity, Trades, and Other Creative Deals
There are instances where agents negotiate an equity position in a property, or a trade for personal property, or some other arrangement. Stephen’s take: that is fine, and that is okay.
What matters is that you recognize it for what it is. A trip, a stay at someone’s vacation home, a boat, a car, whatever it may be, if it has value and you are receiving it in connection with the transaction, it is still compensation.
If It Is Compensation, It Goes in the Agreement
Non-cash compensation needs to be disclosed on your listing agreement, just like a commission would be. The listing agreement documents the compensation that you and your firm are agreeing to.
Remember that compensation flows through the firm. Your broker-in-charge needs to know about these arrangements, and they need to be reflected in writing, not handled as a side deal between you and the seller.
The Practical Takeaway
Do not accept any additional compensation that has not been agreed to in writing as part of the listing agreement. That includes the week at the beach house and the “thank you” boat ride that is really part of the deal.
If something of value is changing hands because of your services, put it in the agreement and run it by your broker-in-charge. Transparency protects you, your firm, and your client.