(Source: February 16, 2011 Edition of NCAR Realtor Report)
QUESTION: I just entered into a buyer agency agreement with a close friend who is considering the purchase of a very expensive home. I feel guilty about keeping what will be a very large commission if the transaction closes. Can I offer to rebate half of my commission to my client even though my client is not a licensed agent?
ANSWER: Yes. Many agents are surprised to learn that there is nothing illegal or unethical about sharing compensation with a party to a transaction. The general rule is that licensed agents may not share compensation with unlicensed persons for any acts performed in North Carolina for which licensure by the Real Estate Commission is required. However, no license is required for a buyer to buy property, or for a seller to sell property. Therefore, sharing compensation with a party is permitted. Agents should be aware that to the extent money or things of value are given to any party, that transfer must be reflected on the HUD-1 settlement statement in order to avoid any allegation of loan fraud. In some cases, lenders will not approve a loan transaction where a rebate is given. An example is where the rebate is the sole source of the buyer’s down payment. For this reason, an agent’s promise to rebate a portion of his fee to his buyer client should always be conditioned on the lender’s approval of the rebate.
