What does the term "commission split" refer to?

The term "commission split" specifically refers to the division of the real estate commission between the listing agent and the buyer's agent. This split typically occurs when a property is sold, and the commission, which is a percentage of the sale price, is divided based on an agreement or understanding between the agents involved.

Understanding how commission splits work is crucial for agents as it influences their incentives and potential earnings from a transaction. Each agent may have different arrangements with their brokerage regarding how much of the commission they retain after the split. Hence, the commission split reflects the collaborative effort between agents rather than just the total amount or percentage associated with the sale or negotiation processes. This arrangement is fundamental to ensuring that both parties involved in a transaction are compensated for their roles in facilitating the sale.