Is It Permissible to Earn Commission From Buying and Selling?

01 February, 2020
Q As-salamu `alaykum, respected scholars. I would like to know whether commission/brokerage income earned working as a mortgage agent/broker or as a real estate and insurance agent/broker is halal (lawful) or haram (unlawful).The underlying premise is that a broker/agent acts as the "middleman" between the company (seller) and the customer (buyer) and gets paid a percentage of sales or a fixed commission based upon sales/services rendered. Jazakum Allahu khayran.

Answer

Wa `alaykum As-Salamu wa Rahmatullahi wa Barakatuh

In the Name of Allah, Most Gracious, Most Merciful. 

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

1- A Muslim should be always keen to earn a halal source of income.

2- It is permissible to take a commission for services you provide as long as it is considered reasonable and fair and the transaction is permitted.


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Taking Commission

The idea of working on commission is permissible and the calculation of the compensation as a percentage of sale or per job is also permissible.

However, there are two questions that we need to ask to determine whether a specific work, and consequently its compensation, are permissible or not.

Conditions

1- Is the contract, transaction, or relationship facilitated by the broker is permitted or not? Of course, being a middleman in, for example, a liquor trade or in lending on interest is haram.

2- Does the facilitator undertake any prohibited act, such as writing an interest-based contract?

We may also need to look at the extent of the function of the middleman. It may be merely giving information to compare and contrast.

Another distinction is between the taqwa (piety) and the fatwa (legal verdict). Of course, the taqwa is to be away, as much as possible, from any haram, while the fatwa is to set the limit line.

Yet another distinction may be added in regard to the proportion of a job, that comes as a package, that involves haram to the total activity of the worker.

Moreover, Sheikh Ahmad Kutty, a senior lecturer and an Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, adds:

You are allowed to take a commission for your service as long as it is reasonable and fair as determined by the standards set by the industry or business. If you fear that parts of your income may be tainted by interest or unlawful elements, then you should certainly cleanse it by giving away a percentage in charity. Allah says: {Good deeds wipe out bad deeds.} (Hud 11:114), and {Take from their wealth a portion as charity in order to cleanse and purify them.} (At-Tawbah 9:103)

Concurrently, you should also make lots of istighfar (asking forgiveness of Allah) and dhikr (remembrance of Allah) while begging Allah to cleanse and purify you and your income.

May Allah make us all self-sufficient with that which He has declared as halal for us so that we do not need to turn to that which He has declared as haram for us-ameen.

Almighty Allah knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.