Broker Commision vs. Flat Fee

The differences between commission and a flat fee are pretty simple:

Commission awards the broker with a certain percentage of the sale. This can be anywhere from 1% to 20% depending on the business the broker is in and company policy.

A flat fee (or a flat or linear rate) is just that - it refers to a single fixed fee charged for services, irrespective of how the service is used.

Both have their advantages and disadvantages to the broker and consumer depending on the business; however, for lending and business brokers, it can play a part in how much money you eventually get. For a business broker, generally a Certified Business Intermediary (IBBA) or an Accredit Business Intermediary (ABBA), commission brokerage is advantageous to the customer over flat fee brokerage. The same holds true for lending brokers, such as mortgage brokers and other individuals who work for banks and financial institutions who are responsible for business loans. The reason why it's better for you, the customer in this case, to work with a broker who is paid on commission is because it acts as a motivator and for the broker to get you more money.

For example, two business brokers are attempting to help two different businesses sell their assets to other businesses. Business A is using a broker who works on a flat fee, and Business B is using a broker who is paid on commission. Business A's broker gets paid the same amount of money no matter what he sells the assets for, so he is going to try to find the easiest, quickest way to sell your assets. He won't care how much they're sold for, and it may end up being high or low, but since Business A's broker is just looking for a quick, easy sale, it'll probably be fairly low. Business B's broker works on commission for his sales, and selling for a low price is just as disadvantageous to him as it is to you. The less he sells your assets for, the less money he gets. Business B's broker will be much more proactive in trying to find someone who will buy your business' assets for a larger sum of money than Business A's broker will, which benefits you in the end.