Compensation vs. Concessions
Real Estate Commission
A real estate commission is a fee paid to real estate professionals for their services in helping to buy or sell a property. This fee is usually a percentage of the property's final sale price and is typically shared between the seller's broker and the buyer's broker.
The commission covers various services provided by the real estate professional resulting in the closing of a real estate transaction. Examples of services but by no means limited to: marketing the property, negotiating the sale, scheduling and facilitating all appointments including photographers, inspections and appraisals, handling the paperwork, and guiding the customer or client through the buying or selling process.
Real Estate Concession
A real estate concession is a benefit, discount, or payment offered by the seller (or sometimes the buyer) that enables the buyer to complete the purchase.
Concessions can take many forms and are typically used to incentivize the deal, making it more attractive to the buyer.
Concessions can cover closing costs, offering repair credits, providing home warranties, inspections, and buyer broker fees.
Concessions can be a benefit that enables the buyer to complete the purchase of a property. Sellers work with their listing agent to consider and decide concessions when listing a property and or negotiating an offer.
Concessions are commonly negotiated during the offer process. During the offer process buyers with their buyer's agent may request concessions and sellers can agree, counter, or decline the request.
Key Differences
Commission: A professional fee paid for services rendered by licensed real estate professionals.
Concession: An incentive, benefit, or payment offered to facilitate the sale which can take various forms.
Commission: Compensates real estate professionals for their work in the closing of a real estate transaction.
Concession: Provides incentives or added value that could enable the buyer to complete the purchase of a property.
Commission: Negotiated between the seller and the listing broker and/or the buyer and the buyers broker and paid at the time of closing.
Concession: Negotiated between the seller and the buyer, affecting the net amount the seller receives and the buyer pays.