How is the commission typically calculated in a real estate transaction?

In real estate transactions, the commission is typically calculated as a percentage of the sale price of the property. This percentage is agreed upon in the listing agreement between the seller and the broker and can vary based on local market standards, the broker's policies, and negotiations between the parties involved.

Using a percentage-based commission structure aligns the broker's earnings with the property's sale price, incentivizing the broker to maximize the sale price for their client. When the property sells for a higher price, the commission increases, motivating brokers to invest their best efforts in marketing the property and facilitating a successful transaction.

The other options do not reflect the standard practices in real estate commissions. A flat fee structure is less common and would not account for the varying values of properties sold. Commissions based on the number of properties sold would not adequately compensate for the actual value of the transactions. Lastly, allowing the seller to dictate the commission amount disregards the industry norms and can complicate the broker's role in ensuring that the compensation structure is fair and competitive.