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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.
How To Use Our Real Estate Commission Calculator
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:
- Input the sale price. This is the amount of money a buyer has agreed to pay for your home. If you haven’t received or accepted an offer yet, enter the price at which you plan to list your house on the market.
- Enter the commission rate. Next, add the fee you agreed to pay your real estate agent, either as a percentage of the home sale price or a flat amount. If you haven’t hired an agent yet, enter 6%, which is slightly above the national average for real estate agent commissions.
- Review your results. Once you enter the above information, click “Calculate” to review the commission you may owe.
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
How To Calculate Real Estate Commission
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.
Home Sale Price
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:
- Try a home value estimator. Real estate websites like Zillow and Redfin can calculate the estimated market value of your home using data on recently sold houses in your area, your home’s sales history and other factors. While the tools are reasonably accurate, the median error rates for on-market homes using the Zillow and Redfin estimators are 3.2% and 2.1%, respectively. Consider the numbers as a starting point only.
- Obtain a comparative market analysis. Real estate agents will usually provide their clients with a comparative market analysis. A comparative market analysis uses recent sales of similar properties in your neighborhood to help determine your home’s value. Real estate agents also factor in your home’s features and overall condition, offering a more reliable estimate than the aforementioned online tools.
- Hire a professional home appraiser. A professional home appraisal is one of the most accurate ways to estimate your home’s selling price. A certified or licensed appraiser will thoroughly inspect your home and use both government records and real estate databases to check the sales prices of recently sold houses near you. Appraisals typically cost a few hundred bucks, but it’s essential to shop around for the best deal.
Commission Rate
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:
- Ask for a lower rate. It’s always worth trying to negotiate commission rates with your real estate agent. In some cases, agents may be open to accepting a lower rate, especially if they believe they will make a quick sale or that you’re selling a high-value property. Be prepared to compare rates from multiple agents to leverage your negotiation.
- Use a flat-fee real estate agent. Instead of the traditional commission model based on your home’s selling price, some agents charge a fixed rate for their services—another reason you should meet with multiple agents before entering into any formal agreement.
- Try a discount brokerage. A discount real estate broker offers services at a reduced cost compared to full-service agents. These brokers typically charge a lower commission rate or a flat fee for their services, providing a cost-saving alternative for sellers. Though their services vary, discount brokers typically focus on the essential aspects of the transaction, such as listing the property, handling negotiations and managing paperwork. Additional services, such as marketing or property staging, may not be included or may come at an extra cost.
- Go it alone. Consider selling your home without hiring a real estate agent. By taking the FSBO (for sale by owner) route, you can save on the selling agent’s commission—though you’ll still generally pay a commission to the buyer’s agent. However, you will be responsible for all aspects of the sale, including marketing, negotiating and paperwork.
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.