By: Joseph Autilio
Executive Director, Massachusetts Board of Registration of Real
Estate Brokers and Salespersons
Q. As a broker can I collect a broker’s fee in purchasing a home for myself?
A. The short answer is yes, but it’s somewhat more complicated than simply saying yes. The reason it’s more complicated is essentially twofold. First, you are not brokering when you buy a home. Secondly, the Board has no regulatory authority over a seller.
Massachusetts General Laws defines a broker and brokering “as one who acts for another.” In other words, a broker is an agent for a buyer or seller. When a broker sells his/her own home or purchases a home for him/herself the broker is not brokering in that transaction, given that the broker is the principal (the buyer) in this transaction.
Consequently, if you are the principal in the transaction (the buyer or the seller) and you act for yourself (meaning you don’t retain a broker to represent you) then you are not an agent for anyone and are not brokering. If you are acting for yourself and are, therefore, not brokering, it is confusing to say that you want to receive a broker’s fee from the selling party. Moreover, arguably, saying that you want to receive a broker’s fee from the seller could be seen as misleading in that it allows the seller to believe that you are brokering in the purchase and sale transaction.
It is, however, also true that the Board does not have jurisdiction over non-licensees like the seller referred to in this question. There are situations where non-licensees act as agents for other parties in the purchase, sale, lease, or exchange of an interest in real property and either receive or expect to receive valuable consideration for such services. Such situations constitute unlicensed brokering and the Board may act to stop unlicensed brokering on its own and in the courts. Based upon the question herein, the seller is free to pay the purchaser (who happens to be a broker and is not represented by one), but the Board would suggest you not refer to such payment as a broker’s fee which could be misunderstood by the seller. Additionally, if properly understood, few, if any, sellers would agree to pay a broker, who is acting for him/herself as a buyer, any kind of fee.
Q. What would happen if I did not respond to the Board’s Order to Show Cause (complaint)?
A. You would be subject to a default motion filed with the Board by the prosecutor assigned to the case. If you failed to respond to that default motion, the Board, pursuant to relevant law, could grant the motion and/or issue a default judgment either revoking your license or revoking your right to renew an otherwise expired license.
It should also be noted that Orders to Show Cause often result when a licensee has failed to respond to Board investigators in a complaint made against you. It’s always wise to respond to the inquiries of the Board’s investigators. |