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. It's typically a percentage of the final sale price and is usually split between the buyer's and seller's agents.

2. How Commission is Calculated

The commission is calculated using this simple formula:

Where:

• Sale Price — The final selling price of the property
• Commission Rate — The agreed percentage rate between seller and agent

3. Typical Commission Rates

Details: While rates vary by market, the average real estate commission is typically between 5-6% of the sale price in the United States. This is often split 50/50 between the listing agent and buyer's agent.

4. Using the Calculator

Tips: Enter the property sale price in dollars and the commission rate as a percentage (e.g., 5.5). The calculator will show the total commission amount.

5. Frequently Asked Questions (FAQ)

Q1: Are real estate commissions negotiable?
A: Yes, commission rates are always negotiable between the seller and their listing agent.

Q2: Who pays the real estate commission?
A: Typically the seller pays the commission, which is deducted from the sale proceeds at closing.

Q3: Is commission taxed differently?
A: Commissions are considered ordinary income for agents and are subject to standard income taxes.

Q4: What's included in the commission?
A: The commission covers agent services including marketing, showings, negotiations, and paperwork.

Q5: Are there flat-fee alternatives?
A: Some brokers offer flat-fee services, but traditional percentage-based commissions remain most common.