What is the most common form of agent compensation in real estate?

The most common form of agent compensation in real estate is commission because it directly aligns the agent's earnings with their performance in closing sales. In this model, agents typically earn a percentage of the sale price of properties they help to buy or sell. This structure incentivizes agents to work diligently since their income is dependent on the successful completion of transactions.

Moreover, commission-based compensation models foster a strong stakeholder relationship between agents and their clients, as agents are motivated to achieve the best possible outcomes for their clients to maximize their own earnings. It is a prevalent practice in the industry because it allows flexibility for agents, who often operate as independent contractors, and it suits the transaction-based nature of real estate transactions.

Other forms of compensation like salary or hourly wage are less common in this field since they don't typically provide the same level of motivation or financial alignment with client outcomes. Additionally, while equity share can be part of certain real estate investment deals, it is not a standard method of compensation for agents in general real estate practice.