How are real estate commissions typically paid?

In real estate transactions, commissions are primarily paid by the seller. This is typically outlined in the listing agreement between the seller and the real estate agent. The seller agrees to compensate the agent for their services, which often includes marketing the property and facilitating the sale. This arrangement incentivizes agents to secure the best possible sale price, as their commission is a percentage of the sale price.

While there are instances where buyers might pay a portion of the commission — particularly in some buyer-broker agreements — the standard practice remains that the seller covers the real estate commission. This is also advantageous for buyers, as they can access professional representation without an immediate direct cost.

The other options present less common scenarios or misinterpretations of standard practices. For example, the notion that the seller's lawyer solely pays the commission is misleading; the legal representation typically handles paperwork but does not directly pay commissions. Additionally, while a third-party escrow account may facilitate the transaction by holding funds until closing, it does not directly pay commissions; such payments are authorized by the seller as part of the transaction process. Understanding these dynamics clarifies the customary role of seller-paid commissions in real estate transactions.