A commission is a fee or payment made to a real estate agent or broker for services provided in facilitating a real estate transaction. It is usually a percentage of the property’s sale price and is generally split between the selling and listing agents if they are different. The standard commission rate can vary but is typically around 5-6% of the property’s sale price, though it can be negotiated.
For example, if a home sells for $500,000, and the commission rate agreed upon was 6%, the total commission on the sale would be $30,000. This commission would typically be split between the buyer’s agent and the seller’s agent.
However, commission structures can vary greatly in the real estate investment industry. In some instances, real estate investment firms might pay a flat fee to brokers or agents, or they may structure commissions on a sliding scale based on the value of the property or the complexity of the deal. It’s also worth noting that some real estate investment firms may have in-house professionals handling these transactions, thereby avoiding traditional commission structures altogether.