What is a "real estate commission"?

A "real estate commission" is primarily a fee that is earned by real estate agents and brokers as compensation for their services in facilitating the sale, purchase, or leasing of real property. This commission is typically calculated as a percentage of the sale price of the property, which aligns perfectly with the correct choice.

The commission structure incentivizes agents to maximize the sale price, as their earnings are directly tied to the property's value. In a typical transaction, this percentage varies but is commonly around 5% to 6% of the sale price, and it is usually split between the buyer's agent and the seller's agent.

Understanding the notion of real estate commissions is critical because they represent a significant expense in real estate transactions, impacting both buyers and sellers during negotiations and decision-making processes. This structure reflects the nature of commission-based work in real estate, reinforcing the incentive for agents to work diligently on behalf of their clients to achieve the best possible outcomes.

Other options do not accurately capture the essence of a real estate commission. For instance, a fee paid only by the buyer does not encompass the dual agency roles typical in transactions, and a fixed fee for maintaining property listings is not reflective of the variable nature of commissions based on market performance. Lastly