What does a real estate commission typically represent?

A real estate commission typically represents the payment made to real estate agents for their services in facilitating the sale or purchase of a property. This commission is usually a percentage of the sale price and is agreed upon in the listing agreement between the seller and the brokerage. The commission compensates the agents for their expertise, including marketing the property, conducting showings, negotiating offers, and managing the transaction process.

In the context of real estate transactions, understanding the role of the commission is vital as it directly relates to the economic relationship between agents and clients, impacting practices in the industry. Commissions incentivize agents to work diligently to secure the best deals for their clients.