commission(redirected from Broker's Fee)
Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia.
The ability to negotiate fees and commissions varies from firm to firm. Some firms are very flexible and give the individual advisors and brokers the ability to negotiate fees to some extent. Some firms offer a discount service via the Internet as well as a full service account. The degree of personal service and advice the investor requires will influence the amount of the discount.George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA
Securities brokers and other sales agents typically charge a commission, or sales charge, on each transaction.
With traditional, full-service brokers, the charge is usually a percentage of the total cost of the trade, though some brokers may offer favorable rates to frequent traders.
Online brokerage firms, on the other hand, usually charge a flat fee for each transaction, regardless of the value of the trade. The flat fee may have certain limits, however, such as the number of shares being traded at one time.
The commissions on some transactions, such as stock trades, are reported on your confirmation slip. But commissions on other transactions are not reported separately.
In the case of cash value life insurance, for example, the commission may be as large as a year's premium.
- a payment to an AGENT or employee for performing particular services on behalf of a buyer or seller of a product, for example the sale of a financial security by a stockbroker (paid by the client); the sale of a car by a salesperson (paid by the garage owners). Commissions may be paid on a fixed or sliding scale basis related to the value of the transaction involved.
- a body which acts as an official regulatory or administrative authority with respect to a specified activity. For example, the COMPETITION COMMISSION hears cases of monopolies, mergers and anticompetitive practices referred to it by the Office of Fair Trading under UK competition policy The European Commission is the main body responsible for the day-to-day administration of the affairs of the EUROPEAN UNION.
- 1payments to AGENTS for performing services on behalf of a seller or buyer. Commissions are usually based on the value of the product being sold or bought. Examples of commissions include salespersons’ commissions, estate agents’ fees and insurance brokers’ commissions.
- a body that acts as an ‘official’ regulatory or administrative authority with respect to a specified activity. For example, the COMPETITION COMMISSION hears cases of monopolies, mergers and anticompetitive practices referred to it by the Office of Fair Trading under UK competition policy. The European Commission is the main body responsible for the day-to-day administration of the affairs of the EUROPEAN UNION.
The compensation paid to a real estate broker for services rendered in connection with a sale,exchange, or lease of property. In order to be entitled to a commission, the broker must have a written contract for the services and must be licensed in the state. Generally the commission is fully earned if the broker produces a buyer who is ready, willing, and able to close at the terms specified in the listing agreement. This is true even if the seller elects not to accept the offer and withdraws the property from the market or increases the price.
Commission rates. Commissions are negotiated independently between the parties. Setting commission rates in advance by local real estate boards or other organizations is a violation of federal law. Most listing agreements now contain a disclaimer advising that commissions are separately negotiated on a case-by-case basis.
Sales commission amounts. Typically expressed as a percentage of the gross sales price of the property, usually ranging from 6 to 10 percent, although higher and lower percentages may be negotiated.
Leasing commissions. Compensation paid to an agent upon lease execution. It is usually calculated as a certain percentage of the total anticipated rent payments, up to a 5-year term.
Example: If the leasing commission is 4 percent on a 5-year lease at $12,000 per month, then multiply $12,000 by 60 months to arrive at $720,000 and the broker is paid 4 percent, or $28,800. The parties may negotiate a lesser percentage for a term longer than 5 years, to be paid at the 5-year anniversary date.
Leasing commissions—lump sum. Sometimes negotiated to be equal to one or two month's rent, or even a certain amount per square foot. The drawback to this method is that the broker is compensated the same for a 3-year lease as for a 10-year lease.
Leasing commissions—payment over time. Occasionally, leasing agents prefer to receive their commissions as each payment of rent is made, rather than in a lump sum at lease signing. The effect is to provide a guaranteed income for many years.
An allowance paid to a salesperson or agent for services rendered.