Florida Real Estate Sales Associate Examination Content OutlineReal Estate Brokerage Activities and ProceduresMedium
A real estate sales associate is employed by a broker and is compensated solely by commission. The sales associate is paid a percentage of the commission earned on each sale. This compensation arrangement is an example of which type of employment relationship in real estate?
- AEmployee.
- BTransaction broker.
- CDual agency.
- DIndependent contractor.
Show answer & explanationAnswer & explanation
Correct answer: D. Independent contractor.
In real estate, when a sales associate is compensated by commission, has control over their working hours, and is responsible for their own expenses, they are generally classified as an independent contractor, not an employee.
Why the other options are wrong
- A. An employee typically receives a salary or hourly wage, has set hours, and receives benefits, which is not described here.
- B. Transaction broker describes a non-fiduciary brokerage relationship with both parties, not an employment type.
- C. Dual agency refers to representing both parties in a transaction, not an employment relationship type.
Independent Contractor (Real Estate)
A real estate sales associate compensated solely by commission, who sets their own hours and pays their own expenses, is typically classified as an independent contractor for tax purposes.
- Compensated by commission only.
- Sets own hours and work schedule.
- Responsible for own expenses (e.g., taxes, insurance).
- Broker provides supervision, but not direct control over methods.
Memory trick: Commission-only, make your own way, independent contractor saves the day!