The U.S. Department of Housing and Urban Development, Washington, DC (HUD), in both a letter to outside counsel and in the new RESPA Rule FAQs page has confirmed that commission can come in a percentage and a flat fee combination.

As discussed in my December 24, 2009 Doc Fee Versus Commission  I shared that the “Broker Administrative Commission” is a part of the commission.  Like all commissions it is not required.  It is separately invoiced by Americana for accounting purposes, but it is simply a part of the listing or selling commission.   It is not a fee for additional services.  The BAC is  a portion of the commission for the real estate services provided by Americana for a buyer or seller.

On January 22, 2010, HUD confirmed Prudential, Americana Group, REALTORS® position.  In this letter from HUD, Helen R. Kanovsky writes, “RESPA does not prescribe how a real estate broker or real estate agent determines the charge for his or her services in any contract with a seller or buyer.  The commission may be determined using a flat fee, a percentage or the sale price, or a combination of those methods.

The new RESPA Rule FAQs  on page 43 and 44 states that in regards to the HUD-1 700 series, “The percentage used to compute the sales commission has been removed from the HUD-1 to better reflect current practices in the real estate industry. The total amount of the commission to each real estate broker or agent must be shown …”

This is not a rule change.  HUD shares that per 24 CFR 3500.4  the January 2010 letter “does not constitute a rule, regulation, or interpretation” of law, and that “no person may rely on it to provide protection from liability under RESPA” or regulations HUD has put in place to implement the law.

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