Real estate & rental
Real Estate Agent Net Commission Calculator
Works net compensation after everything, which is the only figure worth planning from.
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
Gross compensation less the brokerage split, less franchise and transaction fees, less the direct costs of that transaction, less a reserve for income and self-employment tax, giving the amount actually available. Each deduction is ordinary and together they remove a substantial share of the gross.
What moves the number
- Brokerage split and whether the cap has been reached.
- Franchise and transaction fees.
- Direct transaction costs including marketing.
- Tax reserve, since nothing is withheld.
Where this one goes wrong
Reserving tax at the point of closing rather than at year end is the single habit that separates agents who find tax season manageable from those who do not, and because the income is irregular the reserve cannot be made up later from a month that may not come. The cap position is the other variable worth tracking during the year, since a closing before and after the cap nets very differently and knowing which applies helps with planning.
Before you quote
- Reserve tax at closing, not at year end.
- Track your cap position through the year.
- Deduct that transaction's direct costs, not an average.
Questions
About this calculator
What is left after everything?
Substantially less than the gross, once the split, franchise and transaction fees, the direct costs of that transaction and a tax reserve are taken. Each deduction is ordinary, and together they are the reason gross figures mislead.
When should tax be set aside?
At closing. Because agent income is irregular, a reserve not made at the point of payment cannot reliably be made up later from a month that may not arrive, and that single habit is what makes tax season manageable.
Does the cap position change the net?
Considerably, since a closing after the brokerage cap has been reached nets much more than one before it. Tracking the position through the year is useful for planning, including for deciding how hard to push a closing date.
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.