What is a real estate commission?

A real estate commission refers to the compensation that real estate agents or brokers earn for their services in facilitating a property transaction. It is commonly calculated as a percentage of the sale price of the property. This percentage typically ranges from 5% to 6% of the sale price, though it can vary based on local market practices and the agreement between the parties involved.

The commission serves as an incentive for agents to sell properties and is usually split between the buyer's agent and the seller's agent. Since the agent's income is tied to the successful sale of the property, their motivation is to ensure that the transaction goes smoothly while also getting the best deal possible for their clients.

In contrast, the other options do not correctly define a real estate commission. A flat fee paid to a buyer does not reflect the commissions paid to agents for their services. A tax imposed on real estate transactions pertains to governmental levies and does not constitute a fee for agent services. Lastly, a fee for property management services refers to the compensation received for managing rental properties, which is distinct from the commission earned in transactions involving property sales.