PSI Virginia Real Estate Practice Exam

What constitutes improper brokerage commission practices?

1. Offering to pay a fee to licensed real estate agents

2. Payment to someone who does not hold a real estate license

3. Fee agreements that are known publicly

4. Compensation tied to sales performance

The correct answer is: Payment to someone who does not hold a real estate license

Improper brokerage commission practices involve paying someone who does not hold a valid real estate license for activities that require a license. In many jurisdictions, including Virginia, only licensed real estate professionals can legally earn commissions or fees for brokerage services. This is to ensure that all transactional parties are protected by the legal and ethical standards established for licensed practitioners. When payment is made to unlicensed individuals for such services, it violates real estate laws and regulations, which are in place to uphold the integrity of the industry and protect consumers. The other options do not constitute improper practices as they fit within legal and acceptable frameworks. Offering fees to licensed agents is a standard practice that incentivizes professional collaboration. Publicly known fee agreements promote transparency and trust within the industry, serving to inform all parties about commission structures. Compensation tied to sales performance is also a common and accepted practice within the industry, enabling agents to earn based on their effectiveness in closing deals. These practices are regulated and upheld by the licensing bodies, distinguishing them from the incorrect action of paying unlicensed individuals.