Final answer:
Upon close of escrow, a broker pays an agent a 'straight commission' based on the percentage of the property's selling price. This payment does not consider the brokerage's annual income, the seller's recommendation, or the time taken to sell the property.
Step-by-step explanation:
Upon close of escrow, a broker pays an agent a "straight commission" based on b. a percentage of the selling price. This commission is usually agreed upon beforehand as a certain percent of the sale price of the property. In real estate, escrow is a term describing the process in which a neutral third party holds on to funds until the completion of a specific condition or event, such as the sale of a property. At the close of escrow, the agent is paid their commission, which is not based on the total annual income of the brokerage, the recommendation of the seller, or the length of time the property took to sell.
For instance, if Freda were to sell her house, which she bought for $150,000 and is now worth $250,000, the agent's commission would be a percentage of the $250,000 selling price, not the price she originally paid or the appreciation in value. Similarly, if Ben were to sell his house, for which he paid $100,000 and is now valued at $160,000, the commission would also be a percentage of the current selling price and not related to the amount of the bank loan he has paid off.