Which rule best describes commission in real estate transactions?

• A. Cannot be over and above the listed price the owner wants
• B. Can be any amount, no max on min
• C. Must be disclosed
• D. Paid by the seller

Answer: (C)

Disclosure of compensation is essential in real estate practice. Clients need to know, in writing, how the brokers will be paid, who pays, and how any split works, and this information belongs in the representation agreement. This transparency helps prevent conflicts of interest and ensures informed consent as agents fulfill their fiduciary duties. Commissions are negotiable and typically expressed as a percentage of the sale price, but the defining rule is that the terms of compensation must be disclosed. While the common arrangement is seller-paid commissions, payment setups are not universal and can vary, so the key principle remains the required disclosure.