Requirements for Indiana Real Estate Advertising & Commissions

Instructor: Tara Schofield
Real estate agents must understand and abide by advertising and commission regulations to ensure their license is protected and their clients are fairly represented. Some of these regulations are outlined in this lesson.

Requirements for Real Estate Agents

One thing you've likely learned is how many rules and laws govern your work as a real estate broker. A few of those laws pertain to what is said in advertisements and how commissions are handled.

Advertisement Requirements

Advertising is a great way to get your name out to potential customers. There are a few key things to remember when running ads. First, make sure the brokerage name is on the ad. You will want your name and contact information, but you cannot run an ad without including the company that holds your license. Second, make sure your ad does not include any false claims or statements you can't prove. For instance, you cannot promise you'll sell someone's house or make guarantees that you can't honor.

When placing ads, capture your potential customer's attention and build your brand. But don't make promises you can't keep or say anything that isn't true.

Commissions Regulatory and Statutory Requirements

Handling money and earnings is very important for real estate agents. Unless you work for a different type of agency or in a different line of work, your paycheck as an agent will come from commissions from sales. There are some processes and rules you need to understand to ensure you get paid and you follow the laws in Indiana.

Splitting Commissions

The most common form of commissions are split commissions. Split commissions are the portion of the total commission the selling agent gets and the buying agent gets. Let's say your client wants to sell their house. When you fill out the listing contract, you state the seller will pay 5% commission that will go to you and the agent of the buyer. Most of the time, the commission is split half and half, meaning you earn 2.5% and the agent for the buyer will get 2.5% of the purchase price of the home. If, for some reason, you are making more or less than half, you would put that in the contract to ensure the other agent is aware of the change in commission split.

Referral Service Participation

You must be a real estate agent to earn a commission from a house sale (or any other type of real estate transaction). What happens if a good client of yours refers a friend to you? You may want to offer some of your commission as a gift to your client. However, that is not allowed and you may lose your license for giving a commission to someone who is not licensed. So what can you do?

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