PSI Virginia Real Estate Practice Exam

Who receives the commission from real estate transactions?

1. The state real estate board

2. The brokerage involved

3. The buyer of the property

4. The property owner

The correct answer is: The brokerage involved

In real estate transactions, commissions are typically paid to the brokerage involved in facilitating the sale. This is due to the role that brokerages play in listing properties, marketing them, and negotiating sales. When a transaction is completed, the agreed-upon commission is paid to the brokerage, which then distributes it among the agents involved based on their agreements. This structure exists because brokerages hold the necessary licenses and have the legal obligations to manage real estate transactions, ensuring compliance with local and state regulations. It's important to understand that while agents earn a portion of this commission, it is the brokerage that officially receives the payment. The other options represent entities or individuals that do not directly receive the commission from real estate transactions. For instance, while property owners may receive proceeds from the sale of their property, they are not the ones receiving the commission, which goes directly to the brokerage. Similarly, the state real estate board does not receive commissions; it oversees the regulatory compliance of real estate practices. Lastly, the buyer of the property does not receive a commission for their role in the transaction. Understanding this system is crucial for any real estate professional or student, as it directly relates to how income is generated within the industry.