Investing With a Broker's License?

[Jack Fernandes]

I was curious as to how licensed brokers (in California, or anywhere similar) handle fee splitting when buying properties for themselves. Presumably as a broker/agent, if you present the selling agent with a buyer, you are entitled to your portion of the fee. What if you are a licensed broker representing yourself? Do you still get to split the fee? How is this usually handled/negotiated? 

On the other end, what if you're a broker but are selling your own house? How are fees negotiated here? Do you get to save out on all fees? 

Thank you in advance for your patience and for answering my question thoughtfully and respectfully. 

[David M.]

@Jack Fernandes

I suppose you need to realize that all brokered transactions are “broker to broker” and licensed agents work for licensed brokers. Real estate has a two tiered licensing system.

So, for the sake of argument let’s say an agents split with the broker is 50/50. So, when the agent closes a transaction, his broker receives the commission due for their end of the transactions, then the agent gets half, in this example, of the commission.

To your question, if it’s a licensed broker who directly completes the transaction, then there is nobody with which to split the commission.

Take it one step further. Let’s say this broker is listing his own property (personal residence or otherwise). There does not need to be a commission paid to the listing agent since the broker would be paying himself a commission which he would only have to pay income tax on.

Does that clear it up?