Which of the following situations is considered to be an incompetent practice by the commission?

Paying a referral fee to a relative who is unlicensed is deemed an incompetent practice by the commission due to the regulatory standards governing real estate transactions. In most states, including Indiana, it is illegal to compensate individuals for referring clients or leads unless they are licensed real estate professionals. This regulation is in place to ensure that all parties involved in a transaction are held to the same legal and ethical standards and to protect consumers from potential exploitation or fraud.

When an agent pays a referral fee to an unlicensed person, it not only violates licensing laws but also undermines the integrity of the real estate profession. Only licensed agents have the legal right to earn commissions or fees related to real estate transactions, which is designed to maintain a certain level of professionalism and accountability in the industry.