Broker Participation

An arrangement for third-party brokers to register potential bidders for properties being sold at auction for a commission paid by the owner of the property or the auction firm.

Broker participation is offered to real estate brokers and their agents who wish to understand more about how to be compensated in a real estate transaction. Sometimes this is referred to as a buyer’s broker, and the buyer’s agent on behalf of the buyer’s broker negotiates compensation structure within the transaction on behalf of the broker.

The law is clear a person must have a license in order to receive compensation from a real estate transaction. In other words, a real estate broker is the only person that can pay a commission, and that real estate broker pays a commission to a salesperson or real estate agent. An auctioneer can also pay another auctioneer commission under certain provisions. Auctioneers sell personal property such as equipment, automobiles, livestock, collector items, or other chattel. The auctioneer may receive compensation for selling real estate if they are licensed in the state of Texas. But make no mistake, a real estate broker cannot pay someone without a license a commission, or a fee, or any other compensation without being properly licensed. That means the real estate broker cannot give an individual $100 or any other amount just because they knew someone and passed along the name.

Broker participation or how broker compensation is paid is generally outlined within the terms conditions of sale in the published auction documents. Ask the auctioneer how to find this information. In most situations, the auctioneer will have such documentation prepared in advance that identifies the property and other circumstances of the sale. The participating broker or the buyer’s broker will complete a form in some capacity and turn that into the auctioneer to know that the buyers broker is procuring cause.

 Yes, real estate agents earn a living by representing buyers and sellers to earn a commission. Compensation is the life bread of real estate professionals and most auctioneers strive to cooperate with other brokers to compensate that brokerage and the agents therein as long as the broker and other agents understand the rules commonly referred to as the terms and conditions that are in place. If you are a real estate professional and you have a buyer, ask the auctioneer about broker participation in connection with any real property auction.