Which entity typically pays the commission in a real estate transaction?

In a typical real estate transaction, the seller is generally responsible for paying the commission. This structure is common in most real estate markets, including Kentucky. The seller agrees to pay a commission to their listing agent when they enter into a listing agreement to sell their property. This commission is often a percentage of the sale price and is incentivized to motivate agents to effectively market and sell the property.

The commission is then typically split between the listing agent and the buyer's agent, which encourages cooperation between agents representing both parties. It's worth noting that while the seller traditionally pays the commission, the costs may ultimately influence the pricing of the property, as buyers' offers often factor in the potential commissions when determining how much they are willing to pay.

Understanding this payment structure is crucial for those entering the real estate profession, as it influences how agents approach negotiations and interactions with both sellers and buyers.