How is the commission on a real estate transaction typically determined?

The commission on a real estate transaction is typically determined by an agreement between the designated broker and the seller. This agreement outlines the commission rate as part of the listing contract and can vary based on several factors, including the property's value, market conditions, and the services provided by the broker. The flexibility in negotiating the commission allows for tailored agreements that meet the needs of both parties involved in the transaction.

Other considerations, such as the federal Truth in Lending Law or guidelines from national associations, do not dictate specific commission rates but rather influence broader aspects of real estate practices and transparency in lending. The assertion that the commission is always a fixed percentage, such as 8% of the selling price, is inaccurate; commission rates can differ widely and are not regulated to a standard percentage.