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 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 $500,000 home 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. The rate may vary based on property type, location, market conditions, and the services provided.

4. Using the Calculator

Tips: Enter the property's 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 deducted from the sale proceeds at closing.

Q2: How is the commission split between agents?
A: The total commission is usually split between the listing agent and buyer's agent, often 50/50 but this can vary.

Q3: Are commission rates fixed by law?
A: No, commission rates are always negotiable between the agent and client.

Q4: Can I avoid paying commission when selling?
A: You can sell "For Sale By Owner" (FSBO) to avoid commissions, but you'll handle all aspects of the sale yourself.

Q5: Do commission rates vary by property type?
A: Yes, commercial properties often have different commission structures than residential properties.