How real estate commission is calculated
Real estate agents are usually paid a percentage of the sale price when the sale closes.
Commission = sale price × commission rate
On a $400,000 sale at 5%, total commission is $20,000.
Commission at common rates
| Sale price | 4% | 5% | 6% |
|---|---|---|---|
| $250,000 | $10,000 | $12,500 | $15,000 |
| $400,000 | $16,000 | $20,000 | $24,000 |
| $600,000 | $24,000 | $30,000 | $36,000 |
| $1,000,000 | $40,000 | $50,000 | $60,000 |
Who pays the commission
Commission rates are not set by law and are always negotiable. The seller agrees on a fee with the listing agent in the listing agreement. Since August 2024, offers of buyer-agent pay are no longer shown on the MLS, and buyers sign a written agreement with their own agent that states that agent’s fee. A seller may still agree to cover it as part of the deal.
How the commission is split
Each agent’s share goes first to their brokerage, which keeps a portion under the agent’s split. An agent on a 70/30 split who earns a $10,000 side keeps $7,000.
How to use this calculator
Enter the sale price, the total commission and the listing agent’s share. The real estate commission calculator shows the total commission, how it divides between the listing side and the buyer side, and what the seller keeps before other costs. Use the rates written in your own listing agreement and buyer agreement, because the rates in the table above are examples.
What the result means
The total is what agent fees take out of the sale price at closing. It is usually the largest selling cost, so it has a direct effect on what the seller keeps. The split shows how much goes to each side. It does not show what each agent takes home, because each brokerage keeps its share first.
More examples
Listing side and buyer side
On a $400,000 sale at 5%, an even split gives each side 2.5%, or $10,000. If the listing side is 3% and the buyer side is 2%, the listing side gets $12,000 and the buyer side gets $8,000. The total is $20,000 either way.
What a lower rate saves
Each half point of commission on a $400,000 sale is $2,000. Going from 5% to 4.5% lowers the total from $20,000 to $18,000. On a $600,000 sale, the same half point is $3,000.
What an agent keeps
An agent who earns a $12,000 side on a 70/30 split keeps $8,400, and the brokerage keeps $3,600. The agent then pays business costs and tax out of that share.
What changes the result
- Sale price. Commission is a percentage, so it rises and falls with the final price. A $10,000 price cut at 5% lowers the commission by $500.
- The rate you negotiate. One full point is $4,000 on a $400,000 sale.
- Who pays the buyer’s agent. If the seller does not cover that fee, the seller’s commission cost is the listing side only.
Common mistakes
- Working from the list price. Commission is paid on the final sale price.
- Assuming there is a standard rate. Rates are negotiable and not set by law.
- Treating commission as the only selling cost. Title and escrow fees, transfer tax and repairs come on top.
- Comparing agents on rate alone. Ask what services each fee covers.
Related calculators
Commission is one line in your closing statement. The transfer tax calculator estimates another one. If your home has gained a lot in value, the capital gains tax calculator shows whether any of the profit is taxable. Buyers can total their own costs with the closing cost calculator.
Frequently asked questions
Can I negotiate the commission?
Yes. Rates and services vary by agent and market, and you can compare several agents before signing.
Is commission paid on the list price or the sale price?
The final sale price.
What else does a seller pay at closing?
Usually title and escrow fees, transfer tax and any agreed repairs or credits. See the home sale proceeds calculator.
Does the buyer pay their own agent?
The buyer’s written agreement states the agent’s fee. The buyer can pay it directly or ask the seller to cover it as part of the offer.
When is the commission paid?
When the sale closes. It comes out of the sale funds at closing, so the seller does not usually pay it in advance.
How much is 1% commission on a home sale?
Multiply the sale price by 0.01. That is $2,500 on a $250,000 sale, $4,000 on $400,000 and $6,000 on $600,000.
Is the commission the agent’s income?
Not all of it. The brokerage takes its share first. On a 70/30 split, an agent keeps $7,000 of a $10,000 side.