2.4 Commission and Compensation Rules

Commissions Are Negotiable

In Georgia, every real estate commission is negotiable between the broker and the client. There is no standard, minimum, or maximum rate set by the Georgia Real Estate Commission (GREC), by any association of REALTORS®, or by any multiple listing service. Any printed 'customary' figure on a form must be left blank or filled in by negotiation.

Antitrust Warning: Agreeing on commission rates, or boycotting brokers who discount, with competing firms is illegal price-fixing under federal and state antitrust law. Each firm sets its rates independently. This area received heightened scrutiny after the 2024 nationwide buyer-broker commission settlements, which changed how buyer-broker compensation is offered and disclosed — but did not create any mandated rate.

When a commission is earned

Unless the listing agreement states otherwise, a broker traditionally earns a commission by producing a buyer who is ready, willing, and able to purchase on the seller's terms. In practice, the listing or buyer-representation agreement controls precisely when compensation is earned and payable (often 'at closing').

Compensation Does NOT Determine Agency

A frequently tested BRRETA principle: who pays the commission does not establish who the broker represents. A seller can pay the buyer's broker, and the buyer's broker still represents the buyer. Likewise, a buyer paying a fee to the listing broker does not make that broker the buyer's agent. Representation flows from the written engagement, not the source of the check.

The Flow-of-Funds Rule (License Law)

Under Georgia license law (O.C.G.A. § 43-40), an affiliated licensee — a salesperson or associate broker — may accept compensation for brokerage activity only from their sponsoring/qualifying broker.

A salesperson who accepts a check directly from a seller, a buyer, or another brokerage commits a license-law violation — even if the underlying commission was legitimately earned. The money must route through the sponsoring broker.

Sharing Commissions and Referral Fees

Lawful sharing

A Georgia broker may share or split a commission with:

• another Georgia-licensed broker (cooperating broker);
• an out-of-state broker who is properly licensed in their own state (a cooperative/referral arrangement);
• the broker's own affiliated licensees (via the sponsoring broker).

Unlawful payments

Under O.C.G.A. § 43-40, it is generally prohibited to pay a fee, commission, or 'finder's fee' to an unlicensed person for performing acts that require a license, or to accept such a payment. Kickbacks and undisclosed compensation are likewise barred.

Exam Tip: The line is the license. Paying an unlicensed person for brokerage activity is the violation. A nominal gift to a past customer that is not tied to a specific transaction is treated differently.

Earnest Money and Commission Disputes

Commission dispute between two brokers

If two brokers disagree about who earned the commission, the dispute is theirs to resolve — through negotiation, association arbitration, or court. It does not delay the closing or affect the buyer and seller.

Earnest money dispute between buyer and seller

When the buyer and seller dispute who is entitled to the earnest money, the broker holding the funds in trust must:

1. Keep the funds in the trust/escrow account — the broker may not unilaterally pick a winner.
2. Wait for a written agreement between the parties, or
3. File an interpleader action, depositing the funds with the court so a judge decides the rightful recipient. GREC rules give brokers a defined process and timeline for handling disputed trust funds.

Common Traps

• A salesperson cannot collect a commission after leaving a brokerage except through that former sponsoring broker.
• A 'net listing' (broker keeps all proceeds above a set amount) is heavily disfavored and risky — do not assume it is freely allowed.
• The party who pays is not necessarily the party who is represented.

Worked Scenario: Routing a Cooperative Commission

Listing broker Alvarez sells a home for $400,000 and agreed to a 6% total fee, splitting it 50/50 with cooperating broker Brooks. At closing, the $24,000 fee is paid to Alvarez's firm; Alvarez then pays $12,000 to Brooks's firm; each firm then pays its own affiliated salesperson per their internal split. The seller cannot write a check straight to Brooks's salesperson, and Brooks cannot pay Alvarez's salesperson directly. Every dollar that reaches an affiliated licensee must pass through that licensee's own sponsoring broker.

If Brooks were an out-of-state broker, the split would still be lawful as long as Brooks is licensed in their home state and did not perform unlicensed brokerage acts inside Georgia.

Trust Account Basics Tied to Compensation

Earnest money and other client funds must be held in a designated trust or escrow account, kept separate from the broker's operating funds. Commingling client money with business money — or using earnest money to pay the firm's bills before it is earned — is a serious license-law violation. A broker may only withdraw an earned commission from trust funds when the contract or the parties authorize it, never as a self-help remedy in a dispute.