In Ohio the amount a broker may charge for commission is:
Audio Lesson
Duration: 2:49
Question & Answer
Review the question and all answer choices
6.00%
A fixed rate of 6.00% is incorrect because no state law or regulation mandates a specific commission rate — stating a fixed percentage implies a legally required rate, which would itself be a form of price-fixing prohibited by federal antitrust law.
Up to 6%
Stating commissions are 'up to 6%' implies a legal cap of 6%, which does not exist in Ohio or any other state — there is no maximum commission rate established by Ohio law, and brokers and clients may agree to any rate they choose.
Up to 7%
Similarly, 'up to 7%' implies a legal ceiling that does not exist in Ohio real estate law — this answer is just as incorrect as 'up to 6%' because it falsely suggests a statutory maximum commission rate.
Negotiable in the listing contract
Why is this correct?
Answer D is correct because in Ohio, as in all U.S. states, real estate commission rates are not set by law, regulation, or any real estate board — they are entirely negotiable between the broker and the client and must be specified in the listing contract. The Ohio Division of Real Estate and Professional Licensing does not establish a maximum or standard commission rate, and any attempt by brokers to collectively agree on a standard rate would constitute illegal price-fixing under federal antitrust law. The listing agreement is the contractual document where the negotiated commission rate is memorialized.
Deep Analysis
AI-powered in-depth explanation of this concept
The principle that real estate commissions are fully negotiable is grounded in federal antitrust law, specifically the Sherman Antitrust Act of 1890, which prohibits price-fixing and collusion among competitors. For decades, local real estate boards published 'standard' commission schedules that all member brokers were expected to follow, effectively fixing prices across the market. The U.S. Department of Justice and the Federal Trade Commission challenged these practices, leading to landmark changes in the 1970s that established commission negotiability as a legal requirement. Ohio, like all states, reflects this federal mandate by making commissions a matter of contract between the broker and the client, set forth in the listing agreement.
Knowledge Background
Essential context and foundational knowledge
Prior to the 1970s, the National Association of Realtors and many local Multiple Listing Services published suggested commission schedules, and brokers who deviated from these rates faced professional censure or exclusion from MLS membership. The DOJ's antitrust enforcement actions in the 1970s, combined with the Supreme Court's ruling in Goldfarb v. Virginia State Bar (1975), which established that learned professions were subject to antitrust law, fundamentally changed how commissions could be discussed and set. Real estate boards were required to eliminate published rate schedules, and the principle of commission negotiability became enshrined in state licensing laws and NAR's Code of Ethics. Ohio's licensing law reflects this history by explicitly treating commission as a negotiated term of the listing contract.
Podcast Transcript
Full conversation between instructor and student
Instructor
Hey there, welcome back to our real estate license exam prep podcast. Today, let's dive into a question that's commonly found on the Ohio state exam. Student, do you have any idea what we're going to tackle?
Student
Oh, I do! It's about the commission a broker can charge in Ohio, right?
Instructor
Exactly! It's a great topic because it touches on something fundamental in the practice of real estate. The question asks: "In Ohio, the amount a broker may charge for commission is:" and then it gives us four options.
Student
Got it. So, are we looking for the percentage or something else?
Instructor
We're looking for the correct understanding of Ohio's commission regulations. The options are A. 6.00%, B. Up to 6%, C. Up to 7%, and D. Negotiable in the listing contract. The right answer is D, but let's talk about why.
Student
Alright, let's hear your deep analysis. Why is D the correct answer?
Instructor
Great question. Commission structures are all about how agents and brokers earn and how consumers pay for services. This question is testing your understanding that in Ohio, commission amounts are not fixed by law but are negotiable between brokers and clients.
Student
So, the law doesn't set a specific percentage like 6% or 7%?
Instructor
Exactly. Ohio law doesn't set a maximum commission rate. Instead, the specific terms are documented in the written listing contract. This is different from other states where there might be a set percentage or a cap.
Student
I see, so the wrong options are wrong because they suggest there's a fixed percentage?
Instructor
Yes, that's right. Option A suggests a fixed 6%, but Ohio doesn't mandate that. Option B and C suggest 'up to' percentages, but there's no legal cap. Only option D correctly reflects the negotiable nature of commissions.
Student
That makes sense. How can I remember this for the exam?
Instructor
Use a memory technique. Think of real estate commissions like negotiating the price of a car. There's no set price; it's just a starting point that you can negotiate up or down based on the market and the services involved.
Student
That's a cool analogy. It helps to visualize it. What should I keep in mind on the exam when I see questions about commissions?
Instructor
Remember, commissions are always negotiable unless the question specifically states otherwise. Avoid options suggesting fixed percentages. It's all about the negotiation and the agreement between the broker and the client.
Student
Got it. Thanks for breaking it down. This really helps clarify the concept.
Instructor
You're welcome! I'm glad we could go over this together. Keep up the great work, and remember, with practice and understanding, you'll ace this exam. Keep studying, and we'll see you in the next episode. Good luck!
Remember 'commission = negotiable' by thinking of a car dealership where the sticker price is just the starting point for negotiation — just as no law sets the price of a car, no law sets the price of a broker's services. The phrase 'It's in the listing contract' is your anchor: whatever rate appears in that signed document is the legal rate, period. Visualize a blank line in the listing agreement with the words 'Commission Rate: ______%' waiting to be filled in by mutual agreement.
When you see commission questions on the exam, immediately think 'negotiable' rather than a fixed percentage.
Whenever a real estate exam question asks about commission rates in any state, the answer 'negotiable' or 'set in the listing contract' is almost always correct — this is one of the most reliable rules in all of real estate licensing law due to federal antitrust requirements. Be especially suspicious of any answer that names a specific percentage, as this implies a legal mandate that does not exist anywhere in the United States. The key phrase to look for in the correct answer is 'negotiable' combined with a reference to the listing agreement or contract.
Real World Application
How this concept applies in actual real estate practice
A homeowner in Columbus, Ohio interviews three brokers to list her $400,000 home. The first broker proposes a 5% commission, the second proposes 6%, and the third offers a flat fee of $8,000. All three proposals are legally valid because Ohio law allows any commission structure that the parties mutually agree upon and document in the listing contract. The homeowner negotiates with her preferred broker and they agree on 5.5%, which is written into the exclusive right-to-sell listing agreement — this documented, mutually agreed rate is the only legally relevant commission figure.
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