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. 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:

Where:

• \( Sale\ Price \) — The final selling price of the property
• \( Commission\ Rate \) — The agreed percentage rate for the commission

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

3. Typical Commission Rates

Details: While commission rates are negotiable, they typically range between 5-6% in the United States. Rates may vary by region, property type, and market conditions.

4. Using the Calculator

Tips: Enter the sale price in dollars and the commission rate as a percentage (e.g., enter 5 for 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 then split between the listing agent and buyer's agent.

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 agents, but this can vary.

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

Q5: Is commission taxable?
A: Yes, real estate commissions are considered taxable income for the agents/brokers who receive them.