Real Estate Commission Calculator: How Much Will You Owe Your Agent?

Real estate commission calculator | How to save on realtor commission | How realtor commissions work | Average realtor commission rates by state | Article summary | FAQ | Tiered commission calculator

Our real estate commission calculator will help you estimate your total realtor commission fees and net profit (after closing costs and loan payoff) when selling your home, based on your target sales price.

Real estate agent commissions are usually the largest cost associated with selling a home. The national average realtor commission rate is 5.49% for home sellers — approximately $27,450 for a $500,000 home! But rates vary from 5–6% nationwide depending on factors like home value, condition, location, and more.

Use the real estate commission calculators and information in this guide to better understand and control your home selling costs so you can save money and maximize profits when you sell.

Real estate commission calculator

How to calculate real estate commission

Calculate your total real estate commission by multiplying the desired commission rate (expressed as a percentage) with the target list price or final selling price of your home (expressed in dollars). Always apply the real estate commission rate to the gross sales price, before you subtract other expenses like loan payoff, taxes, and closing costs.

Here’s a quick example of how to calculate total real estate agent fees using a 6% commission rate and $500,000 home sale:

1. Determine your realtor commission rate. For example, total commission is often 6%. This fee is split by both agents, so each gets 3%.
2. Divide the commission rate by 100 (or simply move the decimal point over two places). Using our example, this would give you .06 (or .03 for each agent).
3. Multiply the commission rate by the final sale price. If you sold your home for $500,000, you would use the following formula: $500,000 x .06 = $30,000.
4. Now you’ve got your total commission in dollars!

Here’s the same real estate commission calculation expressed as a single formula:

(6/100) * $500,000 = $30,000

How do real estate agent commissions work?

In a conventional real estate deal, the seller’s agent buyer’s agent each receives a share of the total realtor commission fee after the sale closes.

• The seller’s agent collects a listing fee for marketing and selling the home.
• The buyer’s agent collects the buyer’s agent fee for bringing a qualified buyer to purchase the home.

The two real estate agents will usually split a full commission roughly down the middle (so if the commission is 6%, each agent gets 3%).

The actual commission split will be defined in the listing agreement the seller signs with their agent before putting their home on the market. And the commission split won’t always be 50/50.

For example, if the seller is working with a low commission real estate broker or agent, each agent might collect different commission split percentages (ex: the listing agent takes 1%, but the buyer’s agent still gets 3%). That's roughly $10,000 in savings.

Who pays real estate commissions?

The home seller typically pays the entire commission, which gets split by both agents — their listing agent and the buyer’s agent. But most sellers won’t pay these fees directly.

Real estate commission fees are typically baked into the list price and taken out of the seller’s net proceeds at closing.

This commission payment structure makes the transaction more affordable for both parties:

• Buyers can cover their agent’s fee with their mortgage instead of out of pocket.
• Assuming the seller is netting a profit on the deal, they won’t have to pay anything out of pocket.

Why do sellers cover the buyer’s agent commission?

Sellers typically cover the buyer’s agent commission to attract buyers and sell their home faster, for more money, and with the best possible terms. It’s considered a marketing expense that benefits the seller in the long run.

Buyers have to drop a ton of cash to buy a house: earnest money, down payment, inspection and appraisal fees, closing costs, and many more. For many home buyers, adding another 2.5–3% out-of-pocket fee for a real estate agent could price them out from buying a home — or at least disincentivize them in a major way.

But practically speaking, the seller isn’t really paying the commissions at all. As was already mentioned, most sellers bake the commission fee into their list price. And the money is always coming from the buyer, whether they pay cash or with a mortgage.

If the buyer is financing the purchase, the benefit is that this additional 5-6% cost gets absorbed into the loan. They still end up paying it, but it’s spread out over many years instead of getting added to the pile of upfront fees.

Why sellers should offer a competitive buyer’s agent commission rate

Buyer’s agents usually prioritize homes and showings based on their potential paycheck. By offering a competitive rate, you’re incentivizing agents to show your home to their clients.

Even in a competitive market, incentivizing buyer’s agents is crucial: you’ll get more offers from more prospective buyers faster, which increases the odds of a bidding war and a higher sale price. It will also attract more qualified offers and better terms. Nearly 90% of buyers work with an agent.^[1]

If you don’t offer a competitive buyer’s agent commission, it may significantly shrink your prospective buyer pool and net you a worse outcome on your sale.

How much do real estate agents actually make in commission?

Most real estate agents end up with only a small fraction of the commission check they walk away with after closing. All real estate agents work under and split their commissions with a parent real estate brokerage (think RE/MAX, Century 21, and others).

How much of their commission check they have to share with their managing broker depends on the following:

• The specific real estate broker: different brands offer different commission split structures.
• Their status and experience level: A new agent typically has less favorable splits (some have to fork over up to 50% of their fee).

So out of a $10,000 listing fee check, a newer real estate agent could realistically end up with $5,000. And that money still has to cover additional expenses incurred throughout the entire home selling process (professional photography, advertising costs, gas, etc.), as well as recurring operational costs (licensing and MLS fees, taxes, association dues, and more).

When do real estate agents get paid their commission fees?

Real estate agents get paid their commission checks after a property sells. Commissions are typically deducted from the home seller’s net proceeds, when checks are being cut and dispersed by the title company or attorneys at the closing table.

It’s common for the seller’s real estate agent to collect the check for the total sales commission, then pay the buyer’s agent their portion. The title company or attorneys may also cut two separate checks for each agent.

If the seller ends up owing more at closing than they’re netting on the sale, they may have to bring cash to the closing table and pay the agents directly.

A few exceptions

</p><p>Some discount brokers, like Redfin, collect commission directly at closing and pay their agents an annual salary instead. And other discount brands — limited-service brokerages and flat-fee MLS services — charge a flat fee up front instead of at closing.</p><p>

Find the average real estate commission rate by state

How to save on real estate commission

There are several ways you can pay less on commission than the national average 5.49% rate (or your local average):

• Hire a low commission real estate company: The savings can be legit, but not all companies are created equal — choose carefully.
• Try to negotiate with a conventional realtor: Although this is possible (especially in the current hot seller’s market), it’s really difficult. Don’t expect a massive rate reduction if you go this route.

Avoid FSBO

</p><p>Listing without a realtor — aka for sale by owner (FSBO) — could potentially help you save by cutting out the listing fee. But we don't recommend this approach for most sellers. FSBO sales require a huge amount of time and effort, and typically bring a lot of legal and financial risk. There's a good chance you'll take a bigger hit on the final sale price than you'll actually save on realtor fees! We recommend low commission brands to get the best of both worlds: expert guidance and service for a fraction of the typical rate.</p><p>

Hire a low commission real estate company

There’s a wave of new real estate companies offering the same general listing services and support as conventional realtors for realtors for a low flat fee or percentage (as little as 1%) instead of the typical 2.5–3% rate.

Although the percentage difference seems small, it can add up to thousands of dollars in savings for home sellers. Different companies create these savings in different ways:

• Full-service discount brokers, like Redfin, use technology and team-based service models to lower operating costs and create savings.
• Some agent-matching services, like Clever Real Estate, match you with local realtors from top brokerages (think RE/MAX, Coldwell Banker) and pre-negotiate lower rates for you.

At a glance: Top low-commission real estate companies (nationwide brands)

» COMPARE: The companies with the lowest commission rates in 2022

If you’re looking to save without sacrificing service, Clever Real Estate is currently our top pick. It offers the lowest rates and biggest average savings of any nationwide brand: 1% listing fees, or a flat $3,000 for homes below $350,000. You choose from multiple agent matches rather than just the single option you’ll get from companies like Ideal Agent. And Clever’s partner agents represent all the major brands and brokerages, like Keller Williams, Century 21, and more. That means you’re getting the same experience and support you’d expect from a conventional realtor — but saving thousands on commission.

Discount real estate brokerage Redfin offers a slightly higher 1.5% listing fee (though minimum fees apply and vary by market). Redfin does have some solid agents, but it has less selection than Clever. The style of service and support is also a bit different than what you get through Clever and conventional realtors: expect a slightly more tech-driven, hands-off experience.

Ideal Agent is a savings-centric agent matching service like Clever, but its rates are twice as high (2% vs. Clever’s 1%). It also offers less selection: you get matched with only one agent (Clever customers can choose between 2–3 and even more than that if they want). Ideal Agent has about 2,000 agents nationwide versus Clever’s 14,000 agents.

Try to negotiate a lower commission rate with a conventional realtor

You can absolutely try to negotiate commission rates with a conventional real estate agent. But it can be difficult — and even a bit stressful. You’ll have to negotiate with a professional negotiator, which isn’t very fun to do (at least for most people). And don’t expect a major price reduction — fractions of a percentage point are more realistic.

This is where agent-matching services like Clever and Ideal Agent can offer serious value: they have more leverage (a recurring source of new business for real estate agents at no upfront cost) to negotiate lower rates for you. For example, a one-off deal for a 1% fee doesn't make sense for an agent. But five 1% deals a month start to change the margins and make a big impact on the agent’s overall revenue.

The bottom line

</p><p>It's 100% worth trying to negotiate rates, especially if you've already found an agent on your own that you really want to work with. Just don't expect a major (or any) price reduction. If you don't have an agent lined up — or just want to compare options, which we recommend — definitely try the agent-matching service route.</p><p>Consumer-centric services like <a href="https://anytimeestimate.com/reviews/clever-real-estate/">Clever</a>, for example, can save you thousands on commission fees compared to if you'd found the same agent on your own. It’s also free with no obligation, so there's no risk in trying it out and seeing if you like who the agents Clever matches you with.</p><p>

Quick summary: Calculating real estate commission

• Calculate your real estate commission fees (F) in dollars by dividing the commission (C) percentage by 100, then multiplying it with the home’s sale price (P).
• Formula for calculating real estate commission: (C/100)*P=F
• Total commission includes fees for two agents: the listing agent’s fee and the buyer’s agent fee.
• Sellers typically cover both agents’ commission fees out of their sale proceeds (not out of pocket, unless they’re underwater on their loan).
• The nationwide average commission rate for conventional realtors is 5.49% — but that varies by agent or brokerage, home value and type, and local market trends (5–6% is typical).
• If you’re looking to save on commission, we recommend trying out Clever Real Estate. Clever's free, no-obligation service matches you with top agents from brokerages like Keller Williams, Century 21, RE/MAX and negotiates low rates for you.
• You can also try negotiating commission rates with realtors on your own, but it will be harder to get a significant rate reduction.

FAQ about real estate commission calculators

Tiered real estate commission structure calculator

Our tiered commission calculator provides five tiers to calculate a sliding scale commission.

Some discount and conventional brokerages and agents are adopting tiered commission structures (sliding scale) to offer more flexibility and competitive pricing for home seller clients — particularly those with more expensive homes.

With tiered commission structures, instead of a set percentage, the effective commission rate decreases as home values increase. After all, selling a $200,000 home is roughly the same amount of work as selling an $800,000 home. But a set 3% commission model means the agent is making a killing on the $800,000 home — and potentially not enough to even cover their marketing costs on the $200,000 sale.

Charging a slightly higher rate for less expensive homes ensures the agent nets a decent profit for their work. And lowering the rates for higher price homes ensures the agent isn’t being overcompensated.

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