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How To Calculate Real Estate Commissions

Basic commission breakdowns

The commission due for a real estate transaction is usually paid from the seller's funds at closing, and calculated as a percentage of the total sales price. If your agency is part of a Multiple Listing Service (MLS), the percentage your office can expect to receive is stated on the listing sheet for each property.

How Do I Know What I'll Earn?

In our MLS, the commission fields are designated as "BAC," Buyer Agency Commission, or "SAC," Seller Agency Commission. If an agency charges a 6% commission to sell a house, then splits the fee with another participating agency, the fields would read "BAC 03" and "SAC 03," indicating that the seller will pay either type of selling agency a 3% commission. The remainder of the commission goes to the listing agency.

The figures below show you what you can expect to earn if you are the selling agent or listing agent for a house with a $100,000 sales price, and a commission of 3% for your portion of the work. You are being paid for 'one side' of the transaction, the selling or listing side. Examples show your share as 50% of the office funds, but your actual percentage may be higher or lower.

    Sales Price: $100,000
    3% of Sales Price = $3,000 to your office

    Your share of the total, 50% = $1,500

If you work at a franchised agency, you might see figures similar to these:

    Sales Price: $100,000
    3% of Sales Price = $3,000 to your office
    Less Fees Paid to Franchising Company ($240)
    Total retained by office = $2,760

    Your share, 50% = $1,380

The Commission Settlement Statement

The actual settlement statement you receive from your broker is much more detailed, giving information such as the property address, the buyer's name, seller's name, and your year-to-date commissions.

Variables

Many real estate offices pay commissions on a sliding percentage scale, with your commission percentage increasing as you bring more revenue to the agency.

Some offices pay agents a higher percentage of the commission income for 'in house' sales, where both the listing and selling agent are within their own office. The agency makes more from these sales since it does not have to share commissions with another office.

Commissions vary from office to office, and in different parts of the country. The commission percentage for land and commercial property is often higher than the commission due on the sale of a home.

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