Illinois Leasing Agent Practice Exam

How are commission rates for properties listed for sale determined?

1. By state regulation

2. By mutual agreement between the broker and the seller

3. Based on property value

4. Set by the local real estate board

The correct answer is: By mutual agreement between the broker and the seller

Commission rates for properties listed for sale are primarily determined by mutual agreement between the broker and the seller. This relationship is built on negotiation and the specific terms agreed upon for each listing. It allows for flexibility, as brokers can adjust their commission rates based on the services offered and the needs of the seller, making it possible to align the commission with the seller's expectations and market conditions. While there may be industry norms or average commission rates that are commonly observed, the final agreement is ultimately a product of negotiation between the involved parties. This personal touch ensures that both the broker's efforts are sufficiently compensated and the seller feels comfortable with the financial arrangement. Additionally, while local real estate boards or state regulations may provide guidelines or standard practices within the industry, they do not dictate the specific rates for individual transactions. These factors might influence the general commission landscape, but they do not replace the need for direct agreement between the broker and seller.