In Massachusetts the amount a broker may charge for commission is:
Audio Lesson
Duration: 2:44
Question & Answer
Review the question and all answer choices
6.00%
Option A is incorrect because Massachusetts law does not mandate a fixed 6% commission rate. This represents a common misconception that commission rates are standardized or set by law, rather than being negotiable terms of a contract.
Up to 6%
Option B is incorrect because Massachusetts does not impose a 6% maximum on commissions. While 6% has been a traditional benchmark in some markets, it's not a legal limitation, and brokers may charge more or less based on their agreement with the client.
Up to 7%
Option C is incorrect because Massachusetts does not establish a 7% maximum commission rate. There is no statutory cap on commission percentages in the state, making this option factually inaccurate.
Negotiable in the listing contract
Why is this correct?
In Massachusetts, commission rates are negotiable between the broker and client and must be specified in the written listing contract. There is no statutory maximum or minimum commission rate set by state law, making the listing contract the definitive document governing commission arrangements.
Deep Analysis
AI-powered in-depth explanation of this concept
Commission structures are fundamental to real estate practice because they directly impact how agents and brokers earn income and how clients understand costs. This question tests understanding of Massachusetts real estate law regarding commission rates. The core concept is that commission rates are not fixed by law but are negotiable between the broker and client. Options A, B, and C suggest fixed percentage caps, which misrepresent Massachusetts law. The correct answer (D) recognizes that commission is determined by market forces and the specific agreement between parties. This question challenges students who may confuse statutory regulations with industry practices. It connects to broader knowledge of agency relationships, contract law, and the business aspects of real estate, reminding students that while real estate is heavily regulated, many operational details remain negotiable within ethical boundaries.
Knowledge Background
Essential context and foundational knowledge
The concept of negotiable commissions stems from the fundamental principle that real estate brokerage is a business relationship governed by contract law rather than rate regulation. In Massachusetts, as in most states, the real estate commission oversees licensing and ethical practices but does not set commission rates. This approach allows market forces to determine fair compensation while requiring transparency through written agreements. The requirement for commission terms to be in writing protects both consumers and licensees by establishing clear expectations and preventing disputes.
Think of commission rates like prices at a flea market - they're not set in stone but are open for negotiation between buyer and seller.
When you see commission questions on the exam, remember the 'flea market' analogy to quickly recognize that commissions are negotiable, not fixed.
When questions mention commission rates, look for options about negotiability or written contracts - these are typically correct over fixed percentage options.
Real World Application
How this concept applies in actual real estate practice
A first-time home seller in Boston meets with two brokers. Broker A offers to list for 6%, while Broker B proposes 5.5% but requires a six-month exclusive listing. The seller, concerned about costs, negotiates with Broker A, who agrees to 5.75% with a four-month term. Both agreements are documented in writing with commission terms clearly specified. This scenario illustrates how commission rates are market-driven and negotiable, with the final amount determined by the specific agreement between broker and client.
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