1. What is Real Estate Commission?

Real estate commission is the fee paid to real estate agents or brokers for their services in facilitating a property sale. This fee is typically a percentage of the property's 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:

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 $300,000 home with a 6% commission rate, the total commission would be $18,000.

3. Typical Commission Rates

Details: While commission rates are negotiable, they typically range between 5-6% of the sale price in the United States. This is usually split between the listing agent (2.5-3%) and the buyer's agent (2.5-3%).

4. Using the Calculator

Tips: Enter the property sale price in dollars and the commission rate as a percentage (e.g., 5.5). The calculator will 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: Are commission rates fixed?
A: No, commission rates are always negotiable between the seller and their listing agent.

Q3: Can buyers pay commission directly?
A: While uncommon, some arrangements may have buyers paying their agent's commission directly.

Q4: Do all agents charge the same rate?
A: Rates vary by agent, brokerage, market conditions, and services provided.

Q5: Is commission taxable?
A: Yes, commissions are considered taxable income for real estate professionals.