How is a real estate agent typically compensated for their services?

A real estate agent is typically compensated by earning a commission based on the sale price of the property. This commission is usually a percentage of the total selling price and is agreed upon in advance between the agent and their client, often outlined in a listing agreement. The commission structure aligns the agent's financial incentive with their client's success in selling the property, as agents generally earn a higher commission with higher sale prices.

This commission model is prevalent in the real estate industry because it motivates agents to work diligently to close deals, providing both buyer and seller clients with a skilled advocate in what can be a complex transaction. In addition, the commission is typically paid at closing, which allows agents to provide their services without upfront payments from clients.

The other choices do not represent the standard practice in real estate compensation: a flat fee for every client does not reflect the common commission-based system; a salary from the firm would indicate an employee relationship not typical for most agents who operate on a commission basis; and receiving a percentage of the buyer’s mortgage approval is not a standard practice as mortgage lenders compensate their services separately. Therefore, the commission model is the predominant and established method for compensating real estate agents.