1. What is Real Estate Commission?

Real estate commission is the fee paid to real estate agents and brokers for their services in facilitating a property sale. In Alabama, this is typically a percentage of the final sale price, split between the buyer's and seller's agents.

2. How Commission is Calculated

The standard commission calculation formula is:

Where:

• \( Sale\ Price \) — Final selling price of the property
• \( Commission\ Rate \) — Agreed percentage rate (typically 5-6% in Alabama)

Example: For a $300,000 home sale with 6% commission, the total commission would be $18,000.

3. Alabama Commission Rates

Details: While commission rates are negotiable in Alabama, the typical range is 5-6% of the sale price. This is usually split between the listing agent (2.5-3%) and buyer's agent (2.5-3%).

4. Using the Calculator

Tips: Enter the sale price in USD and the commission rate as a percentage (e.g., 5.5). The calculator will show the total commission amount before any splits between agents.

5. Frequently Asked Questions (FAQ)

Q1: Are commission rates fixed in Alabama?
A: No, commission rates are always negotiable between the seller and their agent.

Q2: Who pays the commission in Alabama?
A: Typically the seller pays the full commission, which is then split between the agents.

Q3: Can commission rates be lower than 5%?
A: Yes, rates can be lower, especially for higher-priced properties or with discount brokers.

Q4: Is commission taxable in Alabama?
A: Yes, real estate commissions are considered taxable income for the agents/brokers.

Q5: How is commission split between agents?
A: The total commission is typically split 50/50 between listing and buyer's agents, but this can vary.