Broker commission

Definition

The success fee a broker earns at closing, paid by the seller out of the price.

Why It Matters

Buyers do not pay it directly but feel it in the asking price, and it explains why a broker pushes back hardest on the last few percent of a negotiation. A finder's fee is the opposite arrangement and worth telling apart. It buys an introduction instead of a process, and it is usually owed by whoever wanted the introduction, which on an off-market deal is the buyer. Agree the number and the trigger before the introduction, because afterwards the leverage has moved. Sellers should get the rate, the minimum, and the tail period in writing before signing an engagement, since the tail is what obliges them to pay a commission on a buyer who appears months after the listing ends. The largest listing marketplace puts the typical range at ten to fifteen percent of the price up to about a million dollars and a reduced percentage above that, with flat fees common at the smallest end. Your engagement letter is still the only rate that binds you.

In numbers: A 10% success fee on a $1.2M sale is $120,000, paid from the seller's proceeds at close.