In real estate agency, what does the term "commission" refer to?

In the context of real estate agency, "commission" specifically refers to the fee that is paid to a real estate agent for their services rendered in helping clients buy or sell property. This fee is typically a percentage of the property's sale price and is contingent upon the successful completion of a transaction.

Real estate commissions are essential in incentivizing agents to assist clients effectively, guiding them through negotiations, marketing the property, and navigating the complexities of real estate transactions. This compensation structure aligns the interests of the agent with those of the client, as agents earn their commission only when a sale is successfully completed.

Other options such as the total sales price of a property, the cost of marketing a property, or the amount charged for document preparation do not accurately represent the distinct meaning of "commission" in real estate agency practice. While these elements are related to the overall real estate transaction, they do not encapsulate the definition of commission itself.