Who is responsible for determining commission fees and splits in a brokerage?

Who is responsible for determining commission fees and splits in a brokerage?

• A. The managing agent
• B. The broker of record
• C. The sales agents
• D. The real estate board

Answer: (B)

The broker of record is responsible for determining commission fees and splits in a brokerage. This is because the broker of record holds the legal responsibility for the brokerage and its operations, including setting the policies regarding compensation for agents. They have the authority to establish the commission structure, which can vary based on the agreements with sales agents and the brokerage's overall business model. The managing agent, although involved in the day-to-day operations of the brokerage, typically reports to the broker of record and does not have final authority over commission decisions. Sales agents are not in a position to set commission fees, as they usually work under the broker's established guidelines. The real estate board generally focuses on setting rules and regulations rather than determining individual brokerage commission structures. Thus, the broker of record is the key person in establishing commission arrangements within a brokerage.

The broker of record is responsible for determining commission fees and splits in a brokerage. This is because the broker of record holds the legal responsibility for the brokerage and its operations, including setting the policies regarding compensation for agents. They have the authority to establish the commission structure, which can vary based on the agreements with sales agents and the brokerage's overall business model.

The managing agent, although involved in the day-to-day operations of the brokerage, typically reports to the broker of record and does not have final authority over commission decisions. Sales agents are not in a position to set commission fees, as they usually work under the broker's established guidelines. The real estate board generally focuses on setting rules and regulations rather than determining individual brokerage commission structures. Thus, the broker of record is the key person in establishing commission arrangements within a brokerage.