How to Calculate Real Estate Commission
Selling a home is a significant financial event, and understanding where your money goes is crucial. In a typical real estate transaction, the commission is usually the largest closing cost for a seller.
The Standard Formula
To calculate the total commission, you multiply the final sale price of the home by the agreed-upon commission rate:
Total Commission = Sale Price × (Commission Rate / 100)
Who Pays the Commission?
In most traditional real estate models, the seller pays the entire commission for both their listing agent and the buyer's agent. This total is typically split 50/50 between the two brokerages at closing. For example, if the total commission is 6%, the listing agent receives 3% and the buyer agent receives 3%.
Realistic Calculation Example
Let's look at a common scenario in today's market:
- Sale Price: $500,000
- Commission Rate: 5.5%
- Total Commission: $27,500
- Listing Agent Cut (50%): $13,750
- Buyer Agent Cut (50%): $13,750
- Net Proceeds (before other costs): $472,500
Is Commission Negotiable?
Yes. Real estate commissions are not set by law. While a 5% to 6% rate is common in many U.S. markets, homeowners can negotiate these rates based on market conditions, the level of service provided, and the specific property value. Some agents offer "flat-fee" listings or tiered service packages to help sellers save on costs.
function calculateCommission() {
var salePrice = parseFloat(document.getElementById('salePrice').value);
var commissionRate = parseFloat(document.getElementById('commissionRate').value);
var listingSplitPercent = parseFloat(document.getElementById('listingSplit').value);
var otherCosts = parseFloat(document.getElementById('otherCosts').value);
// Validation
if (isNaN(salePrice) || salePrice <= 0) {
alert("Please enter a valid property sale price.");
return;
}
if (isNaN(commissionRate) || commissionRate < 0) {
alert("Please enter a valid commission rate.");
return;
}
if (isNaN(listingSplitPercent) || listingSplitPercent 100) {
alert("Please enter a valid listing split percentage (0-100).");
return;
}
if (isNaN(otherCosts)) {
otherCosts = 0;
}
// Calculations
var totalCommission = salePrice * (commissionRate / 100);
var listingShare = totalCommission * (listingSplitPercent / 100);
var buyerShare = totalCommission – listingShare;
var netProceeds = salePrice – totalCommission – otherCosts;
// Formatting
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
// Display Results
document.getElementById('resTotalComm').innerText = formatter.format(totalCommission);
document.getElementById('resListShare').innerText = formatter.format(listingShare);
document.getElementById('resBuyShare').innerText = formatter.format(buyerShare);
document.getElementById('resNetProceeds').innerText = formatter.format(netProceeds);
document.getElementById('resultsArea').style.display = 'block';
// Scroll to results on mobile
if (window.innerWidth < 600) {
document.getElementById('resultsArea').scrollIntoView({ behavior: 'smooth' });
}
}