In real estate, what is the term for the monetary compensation paid to agents upon closing a sale?

The term that refers to the monetary compensation paid to agents upon closing a sale is "commission." In real estate transactions, when a property is sold, agents typically receive a percentage of the sale price as their commission. This compensation is generally outlined in the listing agreement or buyer's representation agreement and is earned after the successful completion of the sale process.

Understanding commission is crucial as it pertains to how agents earn income and how their services are compensated. It reflects the value of their expertise and efforts in facilitating the transaction. Commission structures can vary based on local practices, the specific agreement between the agent and their brokerage, and the nature of the transaction itself.

Earnest money, while related to the transaction as it represents a deposit made by a buyer to demonstrate serious intent to purchase, does not constitute the payment to agents. Similarly, referral fees are payments made to an agent for referring a client to another agent rather than being directly tied to the sale completion. A brokerage fee, while also relevant, typically encompasses various costs associated with running a brokerage and may be distinct from the commission paid to individual agents for a specific transaction.