How are commission rates charged by real estate brokers determined?

Commission rates charged by real estate brokers are primarily determined by the agreement between the broker and the principal, which refers to the client receiving the services of the broker. This agreement establishes the terms under which the broker will operate, including how much they will be compensated for their services.

In real estate, it's common for these commission rates to vary based on factors such as the type of property, the specific needs of the client, and the negotiated terms of service. The flexibility to negotiate allows for tailored agreements that suit the individual circumstances of a transaction. While local market standards and brokers’ discretion can influence discussions around rates, it is ultimately the agreement between the broker and principal that defines the finalized commission structure.