Champions Law of Agency Practice Test

A commission split in real estate transactions refers to the distribution of the total commission earned from a sale among the various agents or parties involved in the transaction. Typically, when a property is sold, the seller pays a commission based on the sale price, which is then divided between the listing agent representing the seller and the buyer's agent representing the buyer.

This division can vary depending on the agreements made between the agents and their respective brokerages. The split allows both agents to be compensated for their work in facilitating the sale, contributing to the overall success of the transaction. Understanding commission splits is essential for agents as it affects their earnings and the financial arrangements of the deal.

The other options do not accurately describe what a commission split entails. Withholding the total commission until closing does not reflect the division of fees among agents. A situation where the listing agent retains all of the commission would negate the buyer's agent's involvement, which is not typical in transactions where both agents are active. Lastly, the commission being set by the seller's market value relates more to determining the initial commission rate rather than how that commission is divided among agents after the sale is completed.