In real estate, what is the meaning of commission?

In real estate, commission specifically refers to a percentage-based fee that is paid to real estate agents for their services in helping to facilitate a real estate transaction. This fee is typically calculated based on the sales price of the property and serves as compensation for the agent's expertise, marketing efforts, and the assistance they provide throughout the buying or selling process.

This structure aligns with common industry practices where agents earn a commission upon the successful closing of a sale, incentivizing them to work diligently to achieve the best outcome for their clients. Commission rates can vary widely but are generally negotiated between the agent and the client, often ranging from 5% to 6% of the property's selling price.

Other options do not accurately capture the definition of a commission in the context of real estate. For instance, property appraisals have their own associated fees separate from agent commissions. Additionally, closing costs encompass various expenses beyond just the agent's commission, such as taxes, title insurance, and lender fees. Finally, while marketing properties can involve fixed fees, they are not synonymous with commission, which is inherently variable and contingent on the transaction's success.