How is a broker's commission determined in a real estate transaction?

A broker's commission is typically determined by what is stated in the listing agreement. This agreement is a contract between the seller and the broker, outlining the terms of the listing, including the commission percentage or fee structure agreed upon by both parties. It is a crucial document that helps establish the expectations and responsibilities of both the broker and the seller during a real estate transaction.

While market conditions can influence the overall commission rates and potentially lead to negotiations, the specific commission that a broker will earn is directly articulated in the listing agreement. This means that even if broader market trends indicate varying commission rates, the agreed-upon terms in the contract govern the broker's compensation for that particular sale. Additionally, the commission is not solely based on the sale price; it is a percentage or fee outlined in the listing agreement and can vary regardless of the final sale price.

Thus, the commission is fundamentally a product of the mutual agreement between the broker and the seller outlined in the listing agreement.