Real estate & rental
Real Estate Agent Commission Calculator
Works compensation on a transaction, from the figures in the agreements rather than any standard rate.
Result
Paying on revenue rewards volume and quietly rewards discounting; paying on gross profit rewards the jobs that actually earn. The choice changes behaviour more than the rate does.
Get a Free Business AuditHow the calculation works
The agreed compensation applied to the sale price, apportioned between the brokerages involved as their agreements provide, then split between brokerage and agent, with fees deducted. Every percentage in that chain comes from a specific agreement, because compensation in a real estate transaction is negotiable and there is no standard or customary rate.
What moves the number
- The compensation agreed in the listing agreement.
- Any separate agreement with a buyer's representative.
- How the amount is apportioned between brokerages.
- The agent's split and the fees that follow.
Where this one goes wrong
Compensation is negotiable and set by agreement, and buyer representation compensation is now negotiated and documented separately from the listing arrangement, with written agreements with buyers required before touring in many circumstances. That means the figures for any particular transaction come from the specific agreements rather than from a market convention, and anyone quoting a customary rate is describing something that does not exist. Read the agreements and use their numbers.
Before you quote
- Take every percentage from the actual signed agreements.
- Document buyer representation compensation separately.
- Do not rely on any figure described as standard or customary.
Questions
About this calculator
Is there a standard commission rate?
No. Compensation in a real estate transaction is negotiable and set by agreement between the parties, and anyone describing a customary rate is describing something that does not exist. The figures for any transaction come from its own agreements.
How is buyer representation compensated?
Through a separately negotiated and documented arrangement, with written agreements with buyers required before touring in many circumstances. It is no longer assumed to follow from the listing arrangement, which changes how the whole calculation is built.
Which figures should I use in the calculation?
The ones in the specific agreements for that transaction: the listing agreement, any buyer representation agreement, any cooperation arrangement, and your own brokerage agreement. Each is a document you can read rather than a rate to assume.
The formula
commission = (revenue or gross profit) x rate
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How to use this calculator
- Sales in the period ($). Enter your own figure; the page starts at $42,000.
- Cost of that work ($). Enter your own figure; the page starts at $24,000.
- Commission is paid on. Enter your own figure; the page starts at Gross profit.
- Commission rate (%). Enter your own figure; the page starts at 10%.
- Base pay for the period ($). Enter your own figure; the page starts at $2,600.
The result updates as you type, so you can try a figure, see what it does to commission earned, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Sales in the period | $42,000 |
| Cost of that work | $24,000 |
| Commission is paid on | Gross profit |
| Commission rate | 10% |
| Base pay for the period | $2,600 |
What comes out
| Result | Value |
|---|---|
| Commission earned main result | $1,800 |
| Total pay | $4,400 |
| Gross profit on the work | $18,000 |
| Left to the business | $13,600 |
| Pay as a share of sales | 10.5% |
Commission of $1,800 plus base pay makes $4,400, leaving $13,600 of the gross profit for the business.
How sensitive the answer is
Holding everything else steady and changing only sales in the period, this is what happens to commission earned. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Sales in the period ($) | Commission earned |
|---|---|
| $21,000 | -$300 |
| $31,500 | $750 |
| $42,000 example above | $1,800 |
| $63,000 | $3,900 |
| $84,000 | $6,000 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Sales in the period ($)
- A money amount, starting at $42,000.
- Cost of that work ($)
- A money amount, starting at $24,000.
- Commission is paid on
- Choose from Revenue, Gross profit.
- Commission rate (%)
- A percentage, between 0 and 60, starting at 10%.
- Base pay for the period ($)
- A money amount, starting at $2,600.
What the results tell you
| Result | What it is |
|---|---|
| Commission earned | The headline result. A money figure. |
| Total pay | A money figure. |
| Gross profit on the work | A money figure. |
| Left to the business | A money figure. |
| Pay as a share of sales | A percentage. |
What is not in this number
Property figures here exclude the costs that decide whether a deal works: vacancy, maintenance, management, capital expenditure and the transaction costs at both ends. A return that looks strong before those frequently does not survive them.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.