When are fees considered earned in real estate transactions?

In real estate transactions, fees are considered earned once a contract is procured, meaning when the agent has successfully secured a signed agreement from a buyer and seller. This signifies that the agent has fulfilled their primary obligation, which is to bring parties together under mutually agreeable terms. The act of procuring a contract is critical, as it establishes the basis for the agent's entitlement to the commission.

While the other scenarios such as payment at closing, acceptance of an offer, or commission splitting can be relevant to the overall transaction process, they do not directly determine when the fees are earned. Payment at closing often occurs after various conditions are met, the acceptance of an offer may not lead to a contract if other aspects aren't finalized, and commission splitting is a process that occurs after the commission has already been earned. Thus, the most accurate time frame for when fees are considered earned is at the moment a valid contract is in place, underscoring the importance of that step in the real estate transaction process.