Real Estate Commission Calculator
Understanding Real Estate Commissions
In most residential real estate transactions, the commission is the primary way real estate agents and brokers are compensated for their services. Typically, this fee is a percentage of the final sale price of the property.
While commission rates are always negotiable by law, the standard total commission often ranges between 5% and 6%. This total amount is usually split between the listing brokerage (representing the seller) and the buyer's brokerage.
Who Pays the Real Estate Commission?
Traditionally, the seller pays the entire commission. This amount is deducted from the proceeds of the sale at the closing table. However, it is important to note that since the seller often factors the commission into the home's asking price, the buyer is technically contributing to this cost through the purchase price.
If you sell a home for $500,000 with a 6% commission rate:
– Total Commission: $500,000 x 0.06 = $30,000
– If the split is 50/50, the Listing Broker and Buyer Broker each receive $15,000.
– The seller's gross proceeds (before other closing costs) would be $470,000.
Factors That Influence Commission Rates
- Market Conditions: In a "hot" seller's market, some agents might offer lower rates due to the ease of selling a home.
- Service Level: Full-service brokerages provide marketing, photography, and staging, while "discount" brokers might offer limited services for a lower fee.
- Property Type: Commercial properties or vacant land may have different commission structures compared to residential homes.
How This Calculator Works
This tool allows you to input the expected sale price and the agreed-upon commission percentage. It then breaks down how much will be paid out in total and how that money is typically split between the two sides of the transaction. Use this to estimate your "Net to Seller" amount, which is the money you walk away with after the agents are paid.