Real estate & rental
Real Estate Realtor Commission Calculator
Works compensation on a sale, where each party's arrangement is its own agreement.
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 sale price and the agreed compensation produce the total, apportioned as the relevant agreements provide and then split with each brokerage and agent. The calculation is simple arithmetic once the agreements are read, and the agreements are the only legitimate source for the percentages.
What moves the number
- Sale price.
- Compensation agreed in each applicable agreement.
- Apportionment between the brokerages involved.
- Each brokerage's split with its agent.
Where this one goes wrong
Compensation arrangements are negotiable in every direction, including the amount, how it is structured, whether it is a percentage or a flat fee, and who pays it, and sellers and buyers can and do negotiate all of it. Treating any figure as fixed misleads a consumer about what they can ask for. The honest use of this calculation is to model the arrangements actually on the table rather than to supply a figure the market is supposed to charge.
Before you quote
- Model the arrangements actually agreed, not an assumed rate.
- Remember the structure is negotiable as well as the amount.
- Check who is obliged to pay each component.
Questions
About this calculator
Can commission be negotiated?
Yes, in every direction: the amount, whether it is a percentage or a flat fee, how it is structured and who pays it. Treating any figure as fixed misleads a consumer about what they are entitled to ask for.
Who pays the buyer's agent?
Whatever the agreements provide, which is now negotiated separately rather than assumed. It can be the buyer, it can be covered through the transaction where the seller agrees, and it is a term to settle in writing rather than inherit.
What figures should go into this calculation?
The ones from the actual agreements on the table. The arithmetic is straightforward; the only way to get it wrong is to supply a percentage from convention rather than from the document that governs the transaction.
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.