1. What is Real Estate Commission?

Real estate commission is the fee paid to agents/brokers for facilitating a property sale. It's typically a percentage of the final sale price and is 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 (typically 5-6% in the US)

Example: For a $500,000 home with 5% commission, the total commission would be $25,000.

3. Typical Commission Rates

Details: While commission rates are negotiable, standard rates vary:

• United States: Typically 5-6%
• Canada: Typically 3.5-5%
• UK: Typically 1-3% + VAT
• Australia: Typically 2-3%

4. Using the Calculator

Tips: Enter the property sale price in dollars and the agreed commission rate as a percentage. The calculator will show the total commission amount.

5. Frequently Asked Questions (FAQ)

Q1: Who pays the real estate commission?
A: Typically the seller pays the full commission, which is then split between the listing and buyer's agents.

Q2: Are commission rates fixed?
A: No, commission rates are always negotiable between the seller and their listing agent.

Q3: How is the commission split?
A: The total commission is typically split 50/50 between the listing and buyer's brokerages, then further split with individual agents.

Q4: Are there alternatives to percentage-based commissions?
A: Yes, some brokers offer flat-fee or tiered commission structures, especially for higher-priced properties.

Q5: Is commission taxable?
A: Yes, real estate commissions are considered taxable income for the agents and brokerages receiving them.