A real estate commission is the fee paid to the brokerages involved in a transaction for their services in marketing, negotiating, and facilitating a sale. It is most often calculated as a percentage of the final sale price.
Commission is always negotiable and is not set by law or industry mandate. Traditionally, the seller paid a total commission that was split between the listing brokerage and the buyer's brokerage, though how buyer-agent compensation is arranged has been changing following recent legal settlements.
Because the amount can be substantial, understanding how commission is structured and who pays it is an important part of any transaction. The commission is typically paid at closing out of the sale proceeds.