How are commissions determined?

Commissions in a real estate transaction typically refer to the fees paid to real estate agents or brokers for their services in facilitating the sale or purchase of a property. The commission is typically a percentage of the final sale price of the property, and it is usually paid by the seller to the real estate agent or broker who represents them.

The commission percentage can vary depending on the agreement between the seller and the agent or broker, but it is typically around 5-6% of the sale price. This commission is split between the seller's agent and the buyer's agent, with each receiving a portion of the commission.

For example, if a property sells for $500,000 with a 6% commission, the total commission would be $30,000. If the seller's agent and the buyer's agent each agreed to a 50/50 split, then each agent would receive $15,000.

It's important to note that the commission is negotiable and can vary based on factors such as the type of property, the location, the current real estate market, and the services provided by the agent or broker.