How are real estate commissions determined?

Real estate commissions are determined through negotiation between the parties involved. This flexibility allows agents and their clients to come to an agreement based on various factors, such as the complexity of the transaction, the level of service provided, and market conditions. Commission rates are not fixed by law, meaning there is no legal requirement mandating specific rates. This also means that agents can offer competitive rates to attract clients or adjust their commissions based on the unique circumstances of each deal.

In contrast, some choices imply limitations that do not reflect the reality of the market. For instance, commissions are not set by the Multiple Listing Service (MLS), as that organization primarily facilitates property listings and does not dictate how much agents charge for their services. Additionally, the notion that commissions are standardized across the industry overlooks the variability in negotiation and personal agent strategies. This inherent negotiability empowers both buyers and sellers to seek terms that best fit their individual needs.