How To Use Our Real Estate Commission Calculator
We built a calculator for you just above this text that will handle this calculation for you as long as you know the input numbers. But if you are looking for the exact formula for calculating real estate agent commission, we’ve got you covered:
- Enter the selling price of the home. Note: this is how much the home will actually sell for, not how much you wish it would sell for. But maybe with some great negotiating skills that wishful selling price could be possible!
- Enter the agent’s commission rate: while this rate can vary – especially by state, 3% is a typical rate for the seller agent.
- Run the numbers. The calculator will automatically populate an output for you as you enter the inputs.
- Optional: get emotional about the final result. Buying or selling a home can be a costly endeavor and an emotional rollercoaster. Don’t forget those random expenses that get rolled into the whole process (e.g. “Minus all the coffee runs. . . “).
If you want to nerd out about the math behind the calculation, the real estate agent commission is the selling price of the home multiplied by the commission rate, then divided by 100. This is the same calculation used to determine GCI (gross commission income).
(Commission Rate/100)×Home Sale Price=Commission in Dollars
We’ll run through a couple of examples:
If the selling price of the home is $500,000 and the commission rate is 3%, the commission owed to the selling agent would be $15,000.
If the selling price of the home is $2,000,000 and the commission rate is 3%, the commission owed to the selling agent would be $60,000. Talk about a big paycheck for the realtor!
What is covered in commission rates?
Selling agents will put together and execute a marketing plan for the home, negotiate with buyers/buyer agents, and simplify the paperwork to get the deal closed. Buying agents will act as a chauffeur to narrow down the search for the right house, negotiate with sellers/seller agents, and simplify all the processes that happen along the way to close on a new home.
Commission rates for the buyer’s agent or seller agent can be negotiated. Historically it fell on the seller’s shoulders to cover the commission fees for the seller and buyer agents. We’re not in that world anymore.
Can commission fees be negotiated?
As with most things in business, commission fees can absolutely be negotiated. And as of August 2024, there may be more negotiation room.
As a result of a lawsuit involving the National Association of Realtors (NAR) and several major brokerages, new commissions are in place. It’s the talk of the town in the real estate industry. Sellers no longer have to cover the cost of the buyer’s agent’s fee, which may lead to more aggressive price competition among buyer’s agents. In addition, listing agents are no longer permitted to state the buyer’s agent commission in the MLS (multiple listing service), as has been common practice for many years.
Homeowners should ask agents what their commission fees are and what is included. There are a lot of great articles and forum threads out there with tips and tricks for negotiating the commission rates. Agents should be prepared to showcase the value they bring to the table in the home buying or selling process.
Ultimately it’s important to remember that a good real estate agent will be well worth the commission fees.