Answer :
Sales associates in real estate agencies act as agents to the principal, the agency, with a responsibility to act in the agency's best interest. They typically earn a combination of fixed salary and commissions on sales, with some agencies like RE/MAX offering high commissions in exchange for a monthly fee.
In the vast majority of real estate agencies, the legal relationship of a sales associate to the agency is that of an agent to their principal. This agency relationship means that the sales associate acts on behalf of the real estate agency when dealing with clients and is obliged to act in the agency's best interest. The compensation structure for sales associates often includes both a salary (a fixed amount regardless of sales) and commission (a percentage of the sales they generate).
For example, RE/MAX operates with a model that offers high commissions, close to 100%, while the agents pay a fixed monthly fee to cover agency expenses, which is attractive to more capable agents. This is different from the more traditional models where commissions hover around 50%.
However, this legal relationship goes beyond employment and includes independent contractors, where an entity acts on behalf of another in various economic relationships. The sales associate, as an agent, is responsible for making decisions and legally binding agreements on behalf of the real estate agency, their principal. Moreover, agents in such agency relationships are expected to act ethically and avoid conflicts of interest, acting primarily in favor of their principal's interests.
