1. What is Real Estate Commission?

Real estate commission is the fee paid to real estate agents or 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 commission is calculated using this simple formula:

Where:

• \( Sale\ Price \) — Final selling price of the property
• \( Commission\ Rate \) — Agreed percentage rate (e.g., 5% entered as 5)

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

3. Typical Commission Rates

Details: While commission rates are negotiable, they typically range between 4-6% of the sale price in most markets. The rate may vary based on property type, location, and market conditions.

4. Using the Calculator

Tips: Enter the sale price in dollars (without commas) 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 commission, which is deducted from the sale proceeds at closing.

Q2: Is the commission rate fixed?
A: No, 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 between the listing agent and buyer's agent, often 50/50 but this can vary.

Q4: Are commissions taxed?
A: Yes, commissions are considered taxable income for the real estate professionals receiving them.

Q5: Can I sell without paying commission?
A: Yes, through "For Sale By Owner" (FSBO) arrangements, but you'll handle all aspects of the sale yourself.