Real Estate Commission Calculator
Calculate real estate commission and closing costs to sell a home using the commission calculator below.
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How to Calculate Real Estate Commissions
Selling a home can be a complex process, especially when it comes to calculating the commission for a real estate agent and closing costs for the sale. It’s important to understand how commissions work to determine how much you’ll need to pay an agent to sell your home.
Real estate commission is the fee paid to a real estate agent for their services to sell your home. The commission is generally a percentage of the sale price, paid upon closing the sale, and is divided between the listing agent that represents the seller and the buyer’s agent that represents the buyer.
The buyer is not obligated to pay the real estate commission, which is why the commissions the seller pays is split between the seller and the buyer’s agent.
The standard commission rate in the US is typically 5% to 6% of the sale price, according to Redfin. This commission rate is negotiable and varies by geographic location, the state of the real estate market, and the services provided by the agent.
You can calculate real estate commissions using a formula.
Real Estate Commission Formula
Since commission is a percentage of a sale, calculating it is as straightforward as multiplying the sale price by the commission rate.
commission = sale price × commission rate
For example, let’s calculate the commission to sell a home for $300,000 with a commission rate of 6%.
commission = $300,000 × 0.06 = $18,000
So, the commission that you would need to pay for the listing agent and buyer’s agent to split is $18,000.
Real estate commission is most often paid by the seller and is deducted from the proceeds of the sale at closing time. The commission is deducted from the sale price and is paid from the proceeds, it is not an additional expense added to the sale price.
How Much Does a Realtor Make?
Real estate is one of many industries in which commissions account for the vast majority of an agent’s annual income, which means there can be substantial variation in how much each realtor makes.
According to the Bureau of Labor Statistics (BLS), the median real estate agent makes about $48,000 per year, but the top ten percent of real estate agents make more than $100,000 per year.
Frequently Asked Questions
What percentage do most real estate agents charge?
Real estate commission in the US is around 5% to 6% of the sale price, on average. This rate varies and is negotiable with the listing agent.
This is typically split between the seller and the buyer’s agent, so each makes 2.5% to 3% in commission.
What is the lowest commission a realtor will take?
Real estate commission is negotiable with the listing agent, and the least amount they will take varies. Typically commission is no lower than 1.5% for the listing agent and buyer’s agent, amounting to a minimum of 3%.
It’s crucial to understand that below average commission rates may impact the sale price and likelihood of your home selling, as listing agents have less money available for marketing and advertising the property, and buyer’s agents are less incentivized to show the home.
It is important to work with your listing agent to determine the right commission for your home, the market, and the area the home is in.
Does the buyer or seller pay real estate commission?
Typically the seller is responsible for paying the commission for the sale of the property. It is important to understand the amount of commission that is paid when selling a home so it can be factored into the sale price.
- Redfin, How Real Estate Commission Works, https://www.redfin.com/guides/how-much-is-real-estate-agent-commission-buyer-seller
- U.S. Bureau of Labor Statistics, Occupational Employment and Wage Statistics, https://www.bls.gov/oes/current/oes419022.htm