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%
Up to 6%
Up to 7%
Negotiable in the listing contract
Why is this correct?
Commission is completely negotiable.
Podcast Transcript
Full conversation between instructor and student
Instructor
Hey there, welcome back to our real estate license exam prep podcast. Today, we're diving into a question that's quite common on the exam and it's all about commission rates in Massachusetts.
Student
Oh, that's a good one. I've been thinking about how commissions work and how they're set. Can you give me a heads-up on what we're going to discuss?
Instructor
Absolutely. The question is: "In Massachusetts, the amount a broker may charge for commission is:" and it gives us four options. We'll go through each one and see why the correct answer is the right choice.
Student
Got it. Let's hear the options. What are they?
Instructor
Sure, here they are: A. 6.00%, B. Up to 6%, C. Up to 7%, and D. Negotiable in the listing contract. Now, the correct answer is D, and let's talk about why.
Student
Okay, so why is D the right answer?
Instructor
Great question. This question tests your understanding of Massachusetts real estate law regarding commission rates. The key concept here is that commission rates are not fixed by law but are negotiable between the broker and the client. So, options A, B, and C suggest fixed percentage caps, which is not accurate in Massachusetts.
Student
I see. So, it's not like there's a magic number that brokers have to stick to?
Instructor
Exactly. There's no statutory maximum or minimum commission rate set by state law. The listing contract is the definitive document that governs commission arrangements. This means that the commission rate is determined by market forces and the specific agreement between the broker and the client.
Student
That makes sense. So, why do students often pick the wrong answers?
Instructor
It's a common misconception that commission rates are standardized or set by law. Students may think there's a fixed percentage that must be charged, like 6% or 7%. But remember, the correct answer is D because commissions are negotiable and must be specified in the written listing contract.
Student
Got it. To help remember this, do you have a memory technique?
Instructor
Absolutely. 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. It's a great analogy to keep in mind.
Student
That's a clever way to remember it. Thanks for that tip!
Instructor
You're welcome! And remember, when you come across questions about commission rates, always look for options about negotiability or written contracts. These are typically the correct answers over fixed percentage options.
Student
Thanks for the reminder. I'll keep that in mind for the exam.
Instructor
You're welcome! And remember, we're here to help you ace your real estate license exam. Keep studying, and we'll see you next time for another episode. Good luck!
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