Real Estate Commission Calculator
What is Real Estate Commission?
Real estate commission is typically a single percentage of the sales price of a sold property that is paid to the seller’s agent’s Realty company directly out of escrow proceeds at the time of a sale. This commission calculator formula is fairly straight forward most of the time, but there are notable exceptions. Please note, all real estate commission is negotiable in the U.S. and there is no set standard.
Four Main Real Estate Commission Exceptions:
1. Who is Representing Who?
Real estate agents that want to be sure not to overcharge their clients might have different rates depending on who represents who. For example, we charge a max. of 4.5% commission where we earn 2% at the time of sale and give away 2.5% to the buyer’s agent (which is by far the majority rate offered in our area). But if a buyer’s agent on our team (and we have some of the top in the metro) brings the buyer we give an automatic, if small discount. The commission goes down to 4.25% total. Then if we represent both the buyer and the seller and there is no buyer’s agent involved (this is rare and something we only do if the seller wants us to) then the total commission goes down to 3%. Finally, if a seller approaches us with a buyer and wants us to supervise an off-market sale (let’s say a family member selling to another, or a tenant buying from a landlord) then the total charge is just 2% – since we are not even putting their home on the market and there is no buyer’s agent involved. Bottom line, if we save money we want to pass that on to the client.
3. Is the Seller Paying Buyer’s Closing Costs?
Another notable exception is not charging the seller a commission percentage based on the sales price, if the seller is also paying the buyer’s closing costs. For example, the seller accepts an offer of 450,000 where they are paying 10,000 of the buyers closing costs (see our article that explains why or why not a seller would pay the buyers closing costs) meaning the seller will only actually net 440,000 for the property but pay commissions off of 450,000. This doesn’t seem fair (and it makes sense why) to many sellers. So often the seller will ask, or the Realtor will offer, to base their commission off the sales price minus any seller paid buyer’s closing costs. Note it is not traditional for the commission to be based on the sales price minus seller closing costs (which typically are not that high, at least in our area).
4. Is the Sales Price extremely High or Low for the area?
Exceptions typically only occur in the extremes. In our area, anything under $150,000 is considered extremely low and might require a higher commission rate offered to the buyer’s agent. When prices get really low, my team has a minimum flat commission charge of 3,000 (which would be 2% off a sales price of $150,000). Anything under 150,000 we would also recommend the seller offer the buyer’s agent a commission of 3%, which would put the total at 5%.
In our area (currently) anything priced over 1.5 million is considered really high. Typically our 2% commission is reduced (depending on how high the price tag goes) and we can also safely reduce the commission we are offering the buyer’s agent and still meet their expectations.
Real Estate Commission Calculator
Whatever the sales price and commission rate might be, you can fill it in and use our simple real estate commission calculator below.
How Much are the Rest of Seller Closing Costs in Oregon?
We wrote that article for you as well. Check out the calculations of seller closing costs here (everything else other than commission costs).September 28, 2020