Objectively ascertainable compensation means a payment amount that may not be known yet, but you know exactly how it will be calculated. For example, a 5% commission on next month’s sales is an amount that will be objectively determined, even though the exact amount of the commission won’t be known until next month is over.
In this example, the 5% commission means that the compensation amount itself isn’t yet known, but has been set in advance.
Objectively ascertainable compensation can be objectively predicted using set rules, which cannot be later changed based on someone’s personal opinion or choice. In other words, anyone looking at the same information would come up with the same amount.
This idea is especially important in real estate buyer broker agreements. Since the 2024 National Association of REALTORS® settlement, a buyer and their agent must sign a written agreement before touring homes, and that agreement must state the agent’s pay in a clear, specific way. Acceptable examples include a flat fee (such as $10,000), a set percentage of the purchase price (such as 2.5%), or an hourly rate. Vague or open-ended terms, like “whatever the seller decides to offer,” are not allowed, because the buyer would have no way of knowing in advance what they are agreeing to pay.
Objectively Ascertainable Compensation (real estate contracts)
