What method is used to determine a broker's commission in a real estate transaction?

The method used to determine a broker's commission in a real estate transaction is typically negotiated between the broker and the seller. This negotiation process allows both parties to come to an agreement on the commission rate based on various factors, including market conditions, the services to be provided, and the specific needs of the seller. Commission rates can vary significantly, meaning that it's essential for brokers and sellers to communicate effectively to establish a fair and agreeable rate.

This flexibility in commission agreements is a fundamental aspect of real estate transactions, as it reflects the unique nature of each sale and the specific dynamics between individual brokers and their clients. The other options do not accurately represent how commission rates are established within the industry. For instance, the Hawaii Real Estate Commission does not arbitrarily set rates; it provides guidelines and regulations but leaves the negotiation process to the broker and seller. Similarly, standard rates set by local brokers can provide a reference, but they are not mandatory and can often be altered based on negotiation. Lastly, payment methods vary, and while cash may be used, the method of payment does not influence how the commission itself is determined.