What is the main purpose of a commission in real estate transactions?

The main purpose of a commission in real estate transactions is to compensate agents for their services. When a real estate agent assists clients in buying, selling, or renting properties, they provide a range of services, including market analysis, property showings, negotiation, and transaction management. The commission is a fee typically calculated as a percentage of the final sale price, which serves as payment for the agent's expertise, time, and effort invested throughout the process.

The commission structure incentivizes agents to perform at their best since their earnings are directly tied to the successful closing of a transaction. This aligns the interests of the agent with those of their clients, encouraging agents to work diligently to achieve the best possible outcomes for their clients.

While commissions may indirectly affect other costs, such as closing costs or advertising expenses, their primary role is to remunerate agents for their role in facilitating real estate transactions.