What is progressive commission and how does it work?

Progressive commission starts at a low percentage for your easy-sale price and increases as the sale price goes up. This aligns your agent's incentives with your goals - they earn more when they get you a better price, encouraging them to work harder for the highest possible sale.

Doesn't the traditional fixed percentage commission structure already align incentives? Why do we need something new?

While traditional fixed percentage commissions do provide some alignment of incentives, the problem is that this percentage applies over the full range of theoretical prices, including $1, $100, and all the other prices at which it would be irresponsible to sell. This makes the reward-to-effort ratio for agents too high at your lowest barely-acceptable price points. They don't have enough incentive to push for higher offers when they could instead spend that time on acquiring new listings and getting those sold. A progressive commission structure addresses this problem by increasing the agent's commission rate as the sale price rises within the range of potentially acceptable prices, creating a much stronger incentive to achieve the highest possible price.

Aren't there great realtors who will already try their best for you, regardless of commission structure?

There are absolutely great realtors, with impeccable intentions, who genuinely care about doing great work and building long-term relationships. However, when it comes to where agents spend their time and how they prioritize their efforts, incentives inevitably matter to hit performance targets and earn a living.

Even the most dedicated professional faces choices about resource allocation—which listings get the premium marketing treatment, how much time and money to spend on staging, or whether to push for one more showing. Performance-based commission structures help ensure your property gets prioritized. For performance-oriented agents trying to win new business, these structures can also help them demonstrate to new clients that they're truly committed to achieving the best outcomes.

Is progressive commission compliant with laws and regulations governing real estate sales?

Commission structures are generally negotiable between parties, but note that regulations vary by state and locality. For example, in Ontario, Canada, commissions may not be based on the spread between the list price and the final sale price, since the list price is part of the marketing strategy. However, rates that increase or decrease based on the sales price may be permitted. The most important thing is that the structure is spelled out clearly in the listing agreement. See the example generated text based on your numbers for more information.

While alternative commission arrangements are often permitted, they typically require broker approval and may have specific disclosure requirements. Before implementing any non-standard commission structure, consult with your broker and consider legal review to ensure compliance with local real estate laws and MLS rules.

Will agents actually accept this type of commission structure?

Some will, some won't. Agent receptiveness varies widely and depends on factors like market conditions, property type, and individual agent preferences. Those who are particularly confident in their pricing and marketing abilities may be interested in performance-based structures. However, many agents prefer traditional commission arrangements for more predictable income.

To turn the question around, one could even say that agent receptiveness to an extremely performance-based model like this is a sign of their confidence in achieving a high sale price for your home. Progressive commissions allow agents to self-select: they will be more interested in listing your home in particular if they feel uniquely competent to get you the highest price. If every agent wants to represent you, the structure you are proposing probably isn't the right one, and is likely too easy and too generous.

How do I present this to potential listing agents?

Use this calculator to generate a professional listing agreement clause and comparison chart. Show them the commission amounts they could earn at different price points. Frame it as a partnership where both of you benefit from achieving the best possible outcome for your property.

When my home sells for a great price, the listing brokerage gets a higher commission with the progressive model than with other models? How come I'm being penalized for success?

This is a great "problem" to have! You've had a very successful sale at a price you were hoping for. The higher commission reflects that your agent delivered exceptional results - exactly what you want.

You want things aligned so that everybody wins in the same circumstances. When your agent succeeds in getting you top dollar, they should be rewarded accordingly. This creates the right incentive structure where your agent is motivated to invest maximum effort, premium marketing, and strategic pricing to achieve the highest possible sale price.

If you find that the commission looks too high on the high end, you can always adjust the progressive commission parameters - reduce the starting rate or decrease the rate increases. The beauty of this model is its flexibility to match your specific situation and comfort level. You just need to find a configuration that works for you and is attractive enough to the right agents.

Why should I consider progressive commission structures?

Progressive commission can help you win competitive listings by demonstrating confidence in your ability to achieve top prices. It differentiates you from agents offering standard commission, shows alignment with seller goals, and can result in higher earnings when you perform well.

Supporting commissions is also a way to increase dealflow: it can attract more clients who are looking for innovative and results-driven agents.

I already do my best for clients, regardless of commission structure. Why does this matter?

Your commitment to excellence is exactly what makes you a great candidate for performance-based commission structures! Many top realtors share this professional approach, and that dedication is what builds lasting success in real estate.

However, even with the best intentions, we all face decisions about resource allocation—where to focus premium marketing efforts, how much time to invest in staging consultation, or which properties get priority attention. It also impacts how many clients we can choose to take on at any given time. Performance-based structures help ensure alignment between your natural drive for excellence and the specific outcomes each client values most.

Additionally, offering progressive commission demonstrates to potential clients that you're confident enough in your abilities to tie your compensation directly to their success. It's a powerful differentiator that shows you're willing to put your money where your mouth is.

How do I price and structure a progressive commission proposal?

Start with a low percentage (often 1-2% below standard rates) up to the easy-sale price: where the home would sell very quickly with little or no effort expended. You want to be sure you can cover your costs at the low end of expectation and participate in the upside when you're able to sell the property for more. It's reasonable to achieve a higher-than-standard effective rate if you knock it out of the park and hit the high end of expectation.

Use this calculator to model different scenarios and find structures that work for both parties. Keep in mind that these numbers are a way that sellers may be comparing you to other listing agents.

What are the risks and how do I manage them?

The main risk is earning less if the property sells at the lower end of the range. Mitigate this by: setting realistic price ranges, ensuring your marketing budget works at all price points, focusing on properties where you're confident about achieving good results, and maintaining a portfolio mix of different commission structures.

Can I use this with my brokerage's standard forms?

This depends entirely on your brokerage's policies and local regulations. While some listing agreements have provisions for custom commission structures, you must get explicit approval from your broker before implementing any non-standard commission arrangement. Some brokerages may require additional documentation, disclosure forms, or legal review. Always consult your broker and compliance department first.

What types of properties work best for progressive commission?

Progressive commission may be most suitable for properties where you provide significant, unique value: through your knowledge of the neighborhood, your connections and your marketing expertise.