1. What is a Realtor Commission?

A realtor commission is the fee paid to real estate agents 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 (typically 5-6%)

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, standard rates in the U.S. typically range from 5% to 6% of the sale price. This is often split 50/50 between the listing agent and buyer's agent.

4. Using the Calculator

Tips: Enter the property 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 full commission, which is then split between both agents involved in the transaction.

Q2: Are commission rates fixed?
A: No, commission rates are always negotiable between the seller and their listing agent.

Q3: What's included in the commission?
A: The commission covers agent services including marketing, showings, negotiations, paperwork, and coordinating the closing process.

Q4: Can I avoid paying commission?
A: You can sell your home yourself (FSBO), but you'll need to handle all aspects of the sale and may still need to offer commission to buyer's agents.

Q5: How is commission taxed?
A: For the seller, commission is deducted from the sale proceeds before capital gains are calculated. For agents, it's taxable income.