The short version
- The fee is usually paid at closing from the sale proceeds.
- Ask for the fee in writing before you sign, even if it is a range.
- Be cautious of agreements longer than a year.
- Taxes on the sale usually cost more than the commission.
How the fee is paid
A broker is usually 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, not the headline price.
What to ask
- How many years have you been a broker, and is it your full time work?
- How will you market the company beyond a listing site?
- What is your fee, and when is it due?
- What share of your listings actually close, and how do you count it?
Watch the agreement
Most listing agreements are exclusive, which is normal. Splitting the work between brokers can mean paying two commissions. Agreements that run five years are a warning sign, and under a year is typical.
Is it worth it?
Sellers often say a broker made the difference between a deal that closed at the right multiple and one that never happened. A broker also levels the field when you face a professional buyer.
Taxes on the sale are usually a far 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 quick. 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 offer very different service. Ask how often they talk with clients, how they screen buyers and what happens if the deal falls apart.
A documented process and secure document sharing, rather than emailing tax returns, are signs of a serious firm.
Next steps
Read how we are compensated or how buyers read your books. Ready? Request a price range.