The short version
- The fee is usually paid at closing from the sale proceeds.
- Get the fee in writing before you sign, even if it is a range.
- Be careful with agreements that run longer than a year.
- Taxes on the sale often cost more than the commission.
How the Fee Is Paid
A broker is normally paid a success fee at closing, taken from the sale proceeds. Attorney and CPA fees and any debt payoff come out of the same proceeds, so plan around what you net rather than the headline price.
Questions Worth Asking
- How many years have you been a broker, and is it your full time work?
- How will you market my company beyond a listing site?
- What is your fee, and when does it come due?
- What share of your listings close, and how do you count that?
Read the Agreement
Most listing agreements are exclusive, which is normal. Splitting the work among brokers can mean paying two commissions. Five year agreements are a warning sign, and under a year is typical.
Is It Worth It?
Many sellers say a broker made the difference between a deal that closed at the right multiple and one that never happened. A broker also evens the field when you face a professional buyer.
Taxes on the sale are usually a bigger cost than the commission, so planning with your CPA is worth more than haggling over the fee.
Timing and Expectations
Expect seven to nine months from listing to closing, and treat six as fast. Ask any broker how long their recent sales took.
Keep the company performing to the end. A slide makes buyers nervous, and a late spike makes them suspicious.
Compare More Than the Percentage
Two brokers can quote the same fee and give very different service. Ask how often they talk with clients, how they screen buyers and what happens if a deal falls apart.
A documented process and secure document sharing, rather than emailed tax returns, signal a serious firm.
Next Steps
Read the broker referral disclosure or see how buyers read your books. Ready? Request a valuation.