1. What is a Real Estate Commission?

A real estate commission is the fee paid to real estate agents/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 standard commission calculation formula is:

Where:

• \( Sale\ Price \) — Final selling price of the property
• \( Commission\ Rate \) — Agreed percentage rate (typically 5-6%)

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

3. Typical Commission Rates

Details: In residential real estate, commission rates typically range from 5% to 6% of the sale price, though they can vary by market and negotiation. This is usually split between listing and buyer agents.

4. Using the Calculator

Tips: Enter the property sale price and commission rate (as a percentage without the % sign). The calculator will compute the total commission amount.

5. Frequently Asked Questions (FAQ)

Q1: Are real estate commissions negotiable?
A: Yes, commission rates are always negotiable between the seller and their listing agent.

Q2: Who pays the real estate commission?
A: Typically the seller pays the commission, which is deducted from the sale proceeds at closing.

Q3: How is the commission split between agents?
A: The total commission is usually split between listing and buyer agents, often 50/50 but can vary.

Q4: Are there alternatives to percentage commissions?
A: Some agents offer flat-fee or tiered commission structures, especially for higher-priced homes.

Q5: Do commissions vary by property type?
A: Commercial real estate often has different commission structures than residential properties.