1. How Is Realtor Commission Calculated?

Realtor commission is typically calculated as a percentage of the final sale price of a property. The standard commission is split between the buyer's agent and seller's agent.

2. Understanding the Commission Formula

The commission calculation uses a simple formula:

Where:

• Sale Price — The final selling price of the property
• Commission Rate — The agreed percentage rate (typically 5-6% in the US)

Example: For a $300,000 home with 5% commission rate, the total commission would be $15,000.

3. Typical Commission Rates

Details: While commission rates are negotiable, they typically range from 5-6% in the United States. The rate may vary based on property type, location, and market conditions.

4. Using the Calculator

Tips: Enter the sale price in dollars 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 realtor 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?
A: The total commission is usually split between the listing broker and buyer's broker, often 50/50.

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

Q5: Are commissions taxed?
A: Yes, commissions are considered taxable income for the real estate agents and brokers.