Iowa Real Estate Practice Exam

A salesperson lawfully receives compensation from which of the following sources?

1. The seller directly

2. The buyer of a property

3. His or her employing broker

4. Other real estate companies

The correct answer is: His or her employing broker

A salesperson lawfully receives compensation primarily from their employing broker, as this aligns with the structure and regulations governing real estate practices. In most real estate transactions, salespersons operate under the license of their broker. The broker is responsible for managing the funds and distributing compensation to the salespersons who work for them. This arrangement also helps ensure compliance with legal and ethical standards set forth by state laws and real estate commissions. While salespersons may engage with sellers or buyers in transactions, the compensation for the services they deliver is legally required to come through their broker. This is to maintain the integrity of the real estate profession and to protect the interests of all parties involved in a transaction. The broker acts as a financial intermediary, thus reinforcing best practices in the industry. Receiving compensation from other sources, such as sellers, buyers, or other real estate companies, may blur the lines of ethical practices and could lead to situations of dual agency or conflicts of interest, which are regulated or prohibited in many jurisdictions. Therefore, compensation structures in real estate are designed to funnel through the employing broker to maintain clarity and protect all parties involved in a transaction.