How To Calculate Real Estate Commissions
How Real Estate Commissions Are Split
Commissions are normally divided, with a portion of each going to the listing office and the selling office. Each office then pays its participating agent a percentage of the total received.
The Franchising Company Gets a Cut
If an office is part of a franchise system, such as CENTURY 21® or Coldwell Banker®, the commission paid to agents within that office is decreased by whatever percentage the franchising company charges.
Some Agents Do Keep More
There are real estate offices where agents pay a monthly fee for brokerage services and office space, and keep all of the commission earned from their closings.
But unless those agents are the listing and selling agent for a transaction, they do not typically receive the entire commission paid by a selling client.
The rent-your-space option works best for agents with an established clientele and regular closings, because fixed monthly fees can be hefty, and each agent is responsible for every expense associated with doing business.
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.
Commissions are normally divided, with a portion of each going to the listing office and the selling office. Each office then pays its participating agent a percentage of the total received.
The Franchising Company Gets a Cut
If an office is part of a franchise system, such as CENTURY 21® or Coldwell Banker®, the commission paid to agents within that office is decreased by whatever percentage the franchising company charges.
Some Agents Do Keep More
There are real estate offices where agents pay a monthly fee for brokerage services and office space, and keep all of the commission earned from their closings.
But unless those agents are the listing and selling agent for a transaction, they do not typically receive the entire commission paid by a selling client.
The rent-your-space option works best for agents with an established clientele and regular closings, because fixed monthly fees can be hefty, and each agent is responsible for every expense associated with doing business.
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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