1. What is Real Estate Commission?

Real estate commission is the fee paid to agents for facilitating a property sale, typically calculated as a percentage of the sale price. This fee is usually split between the buyer's and seller's agents according to their agreement.

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 most markets)

Example: For a $500,000 home with 5% commission, the total fee would be $25,000, typically split between listing and buyer's agents.

3. Legal Aspects of Commission

Details: Commission rates are negotiable and must be clearly stated in the listing agreement. They are only payable upon successful closing of the transaction unless otherwise specified.

4. Using the Calculator

Tips: Enter the property's sale price and the agreed commission rate. The calculator will instantly 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 brokers.

Q2: Are commission rates fixed by law?
A: No, commission rates are negotiable and set by market competition, not legal mandate.

Q3: Can commission rates vary by property type?
A: Yes, commercial properties often have different commission structures than residential properties.

Q4: When is commission legally earned?
A: Commission is earned when a ready, willing, and able buyer is produced under the listing terms, though payment typically occurs at closing.

Q5: What if a sale falls through?
A: Unless specified in the contract, agents generally don't receive commission if the sale doesn't close.