Commission

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A commission is compensation received by a person for services performed. Commissions are paid based on a percentage of sales made or a fixed amount per sale.

With brokerages, the commission is the fee paid to a broker to execute a trade, based on the size of the order and/or its dollar value. Discount and online brokerage firms may charge the same flat fee to execute trades regardless of how large or small the order.

With real estate, the commission is the amount, usually a percentage of the property sales price that is collected by a real estate professional as a fee for negotiating the transaction. Traditionally the home seller pays the commission. The amount of commission is determined by the real estate professional and the seller and can be as much as 6% of the sales price.