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Updated: Aug 22, 2023, 1:09pm
According to the National Association of Realtors Profile of Home Buyers and Sellers, 86% of homebuyers in 2022 purchased their home through a real estate agent or broker, most of whom are paid via commission. Some real estate agents charge a flat rate for their services or are paid a salary by their brokerage, though that is less common.
Home sellers usually cover the real estate commissions. However, many sellers incorporate the estimated commission into their home’s selling price, transferring the cost to the buyer.
Regardless of where you are in the home selling process, a real estate commission calculator can indicate your commission payment during the home sale process.
Follow these steps to use the Forbes Advisor real estate commission calculator:
Our real estate commission calculator uses a simple formula. It takes the commission rate, divides it by 100 and then multiplies it by the home sale price:
(Commission Rate/100) x Home Sale Price = Commission in Dollars
For example, a 6% real estate commission on a home with a $200,000 sale price comes out to $12,000 (6/100 x $200,000 = $12,000).
Related: How To Find A Real Estate Agent
Real estate commission is usually calculated as a percentage of the home’s selling price, with the seller’s agent and the buyer’s agent each receiving half of the agreed-upon rate.
The commission is then further divided between the agents and their brokers. A common commission split gives the agent 60% and the broker 40%, but this varies based on the brokerage. More experienced agents can claim a bigger share than newer, less experienced real estate agents.
A home’s sale price is one of two numbers used to calculate real estate commission. You have several options for determining your selling price when you decide to put your home up for sale:
The commission rate is the other factor that goes into calculating real estate commission. The rate generally ranges from 5% to 6% of your home’s final sales price, though this percentage can sometimes be negotiable.
What the Commission Covers
Real estate commission covers a real estate agent’s fee. According to HomeLight, a real estate tech company, these services include guidance on presale home improvements, pricing strategy, marketing (such as home staging and open houses), offer management, negotiations, market knowledge and neighborhood expertise.
These services are designed to sell your home as fast as possible. The commission rate also incentivizes buyer agents to show your home to their clients and help finalize the deal.
How To Save Money on Real Estate Commission
You can expect to pay between 5% and 6% in real estate commission when selling your home—but the percentage isn’t set in stone. There are a few ways you can try to save money on real estate commissions:
While paying less in real estate commissions when selling your home is possible, it’s also essential to weigh your potential savings against the value that a skilled agent can bring to the table, including their expertise, marketing resources and negotiation skills.
Kelli Pate is a full-time copy editor and freelance writer who has written for CreditCards.com, Bankrate, MoneyGeek, DailyWorth, Vox.com, Entertainment Weekly, and Mic, among other publications. When she’s not busy recalculating her F.I.R.E. number or pondering her next vacation (paid for with travel rewards, obviously), she’s working on house projects and listening to audiobooks, most recently Matt Haig’s “The Midnight Library”.