The commission amount is determined by agreement between the seller and the broker according to which act?

The commission amount in real estate transactions is primarily determined by mutual agreement between the seller and the broker, and this practice is regulated under the Sherman Antitrust Act. This act prohibits anti-competitive agreements and practices in the marketplace, such as price-fixing, which can include setting commission rates. By enforcing fair competition, the Sherman Antitrust Act ensures that brokers and sellers can negotiate commission rates without the influence of collusion or anti-competitive practices.

The act is pivotal in maintaining a free market where brokers have the liberty to set their own rates based on the value of their services and the specifics of the transaction. This framework allows for flexibility and negotiation, ensuring that both parties agree on a commission that reflects the market realities and their individual circumstances. Understanding this act is essential for anyone involved in the real estate industry, as it underscores the importance of competitive practices and individual agreements in determining commission structures.