When are real estate commissions generally collected in a transaction?

Real estate commissions are typically collected at the time of closing because this is when the actual transfer of ownership occurs, and the funds for the sale are finalized. At closing, the buyer secures financing, and the seller receives payment for the property, making it the most appropriate time to distribute commission payments to the agents involved in the transaction. This ensures that the agents are compensated once the deal is completed and funds are available, reducing the risk of any contingencies affecting the commission payment.

While commissions could be discussed or implied during the signing of the purchase agreement or before listing the property, the legally binding moment for the exchange of payment for the services provided occurs at closing.