1. What is a Real Estate Commission?

A real estate commission is the fee paid to real estate agents or brokers for their services in facilitating a property sale. This is 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 standard commission calculation formula is:

Where:

• Sale Price — The final selling price of the property
• Commission Rate — The agreed percentage rate (typically 5-6% in the US)

Example: For a $500,000 home with a 6% commission rate, the total commission would be $30,000.

3. Typical Commission Rates

Details: While commission rates are negotiable, standard rates in the US typically range from 5% to 6% of the sale price. The rate may vary based on location, property type, and market conditions.

4. Using the Calculator

Tips: Enter the property sale price and commission rate. The calculator will instantly compute the total commission amount. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Who pays the real estate commission?
A: Typically the seller pays the 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 between agents?
A: The total commission is typically split 50/50 between listing and buyer's brokers, who then split their portion with their agents.

Q4: Are there alternatives to percentage-based commissions?
A: Yes, some brokers offer flat-fee services or reduced rates for limited services.

Q5: Are commissions taxed?
A: Yes, commissions are considered taxable income for the real estate professionals receiving them.