1. What is Real Estate Commission?

Real estate commission is the fee paid to brokers and agents for facilitating a property sale. It's typically a percentage of the sale price and is split between the listing and buying brokers, then further divided between brokers and their agents.

2. How Commission is Calculated

The standard commission calculation formula is:

Where:

• Sale Price — Final selling price of the property
• Commission Rate — Total commission percentage (typically 5-6%)
• Broker Split — Percentage the agent receives from their broker (typically 50-70%)

3. Understanding Broker Splits

Details: The broker split determines what percentage of the commission the agent keeps versus what goes to their brokerage. Common splits are 50/50, 60/40, or 70/30 in the agent's favor, especially for experienced agents.

4. Using This Calculator

Tips: Enter the sale price in dollars, commission rate as a percentage (e.g., 5.5), and broker split percentage (e.g., 60 for 60%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical commission rate?
A: Rates vary but are typically 5-6% of the sale price, split between listing and buyer's brokers.

Q2: Are commission rates negotiable?
A: Yes, commission rates are always negotiable between the seller and their listing agent.

Q3: Who pays the commission?
A: Typically the seller pays the commission, which is deducted from the sale proceeds at closing.

Q4: What's a tiered split?
A: Some brokerages use tiered splits where the agent's percentage increases after reaching certain sales thresholds.

Q5: Are there alternatives to percentage commissions?
A: Some brokers offer flat-fee or discounted commission models, especially for high-value properties.