Key Takeaways
- Commission rates are always negotiable—price fixing is illegal
- Brokers can only receive compensation through their Managing Broker
- Commission is typically earned when the broker produces a ready, willing, and able buyer
- Referral fees can only be paid to licensed individuals
- Commission disputes are civil matters resolved in court
Last updated: January 2026
Commission & Compensation
Understanding compensation rules prevents violations and disputes.
Commission Basics
Negotiability
| Rule | Details |
|---|---|
| Always negotiable | No fixed rates |
| Price fixing illegal | Cannot set industry rates |
| Disclosure | Disclose commission terms |
| In writing | Should be documented |
Typical Rates
| Property Type | Typical Range |
|---|---|
| Residential | 5-6% (varies) |
| Commercial | Varies widely |
| Land | 6-10% (varies) |
Note: These are typical ranges only—all rates are negotiable.
When Commission is Earned
Traditional Rule
| Condition | Details |
|---|---|
| Ready | Buyer ready to purchase |
| Willing | Buyer wants to buy |
| Able | Buyer can qualify/pay |
| Meeting terms | Matches listing terms |
Illinois Practice
| Situation | Commission |
|---|---|
| Buyer at full price | Usually earned |
| Sale closes | Typically when paid |
| Buyer defaults | May depend on contract |
| Seller refuses | Possible commission claim |
Payment Rules
Who Pays Whom
| Rule | Details |
|---|---|
| Through Managing Broker | All compensation to MB |
| To Brokers | MB distributes |
| No direct payment | Client never pays Broker directly |
Co-Brokerage
| Situation | Payment |
|---|---|
| Listing broker | Receives from seller |
| Selling broker | Receives from listing broker |
| Cooperating compensation | Per MLS offer |
Referral Fees
Legal Referrals
| To | Allowed |
|---|---|
| Licensed real estate | Yes |
| Out-of-state licensee | Yes |
| Unlicensed person | NO |
| Expired licensee | NO |
RESPA Compliance
| Prohibited | Allowed |
|---|---|
| Payment for referral only | Payment for services |
| Kickbacks | Disclosed fees |
| Fee splitting with unlicensed | Fee splitting with licensees |
Commission Disputes
Resolution
| Method | Process |
|---|---|
| Civil lawsuit | Court decides |
| Mediation | Voluntary |
| Arbitration | If agreed |
| Procuring cause | Key determination |
IDFPR Role
| What IDFPR Does | What IDFPR Doesn't Do |
|---|---|
| License violations | Settle commission disputes |
| Discipline | Award commissions |
| Regulate practice | Determine who earns |
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Test Your Knowledge
Can a broker set commission rates in consultation with other brokers in the area?
A
B
C
D
Test Your Knowledge
Can a real estate Broker pay a referral fee to an unlicensed friend who referred a client?
A
B
C
D