1. What is a Real Estate Commission?

A real estate commission is the fee paid to real estate agents 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:

Example: For a $500,000 home with a 5% commission rate:

• Commission = $500,000 × (5/100) = $25,000
• This is typically split between listing and buying agents

3. Typical Commission Rates

Standard Rates: While negotiable, typical rates range from 4-6% of the sale price in most markets. Rates may be higher for commercial properties or lower in competitive markets.

4. Using This Calculator

Instructions: Enter the sale price of the property and the commission rate percentage. The calculator will instantly compute the total commission amount.

5. Frequently Asked Questions (FAQ)

Q1: Who pays the real estate commission?
A: Typically the seller pays the commission, which is deducted from the sale proceeds at closing.

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

Q3: How is the commission split between agents?
A: The total commission is usually split 50/50 between listing and buying agents, but this can vary.

Q4: Are commissions taxed?
A: Yes, commissions are considered taxable income for the real estate agents/brokers.

Q5: Can I avoid paying commission?
A: You can sell your home FSBO (For Sale By Owner), but you'll need to handle all aspects of the sale yourself.