1. What is Real Estate Commission?

Real estate commission is the fee paid to real estate agents and brokers for their services in facilitating a property sale. It's typically calculated as a percentage of the final sale price of the property.

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% in the U.S.)

Example: For a $500,000 home with 6% commission rate, total commission would be $30,000.

3. Who Pays the Commission?

Details: In most cases, the seller pays the full commission, which is then split between the listing agent and buyer's agent. The commission is deducted from the seller's proceeds at closing.

4. Using the Calculator

Tips: Enter the 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: Is commission always a percentage of sale price?
A: While percentage-based is most common, some agents may charge flat fees or hybrid models, especially for very high-value properties.

Q2: Are commissions negotiable?
A: Yes, 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: Do buyers pay any commission?
A: Normally no, unless specified in the contract. Buyers' agents are paid from the seller's commission in most cases.

Q5: Are commissions taxed?
A: Yes, commissions are considered taxable income for the real estate professionals receiving them.