How to Calculate a Realtors Commission

Calculating Real Estate Commissions is Easy

Whether you are a buyer, seller or a realtor, the most important part of your transaction will involve the commission. These steps will take the mystewry out of the transaction.

Things You'll Need

• Calculator

Instructions

1. If you are the buyer, don't worry. The commission is not your responsibility. If you are the seller, you on the other hand, will need to pay a commission to both the listing and selling agent even if they are not the same person.

2. Before signing a listing agreement with your agent to sell your home, you must agree on the listing agent's commission. The standard commission is based on the percentage of the total sales amount. This is usually anywhere from 6-8%. Built in this percentage is a "split" amount that is paid to the selling agent if he/she is not the same as the listing agent.

3. You decide to sell your home for 200,000. (in this market that might be an overstatement!)If your agent brings a buyer to the table, he/she is BOTH the listing and Selling agent. Therefore:
   Your house: $200,000
   Your Agents Commission: 6% (let say that is the agreed upon amount)
   The Commission: $12,000 or (200,000 X .06 or 6%)
   Nice Commission!

4. If another agent brings a buyer to the table:
   Your house: $200,000
   (For this example you agreed to a split of 3.5% for your agent and 2.5% for the selling agent. 6% Total)

   Listing Agent Commission Split: $7,000 (200,000 X .035 or 35%)
   Selling Agent Commission Split: $5,000

Tips & Warnings

• Some agents will offer a higher percentage to the Selling agent to encourage more traffic in the home

• All modification to the commission structure should be in writing