The calculation involves multiple steps: determine the total commission from the sale price, divide between brokerages, then divide between broker and agent. Commission rates are always negotiable—any suggestion that rates are fixed violates antitrust law.
A home sells for $400,000 with a 6% total commission = $24,000. Split equally between brokerages = $12,000 each. If the listing agent has a 70/30 split with their broker, the agent receives $12,000 x 0.70 = $8,400.
Commission split problems require step-by-step calculations. Always start with total commission (Sale Price x Rate), then split between brokerages, then between broker and agent. Some questions work backward—giving agent earnings and asking for sale price. Remember that commissions are always negotiable.
Related Terms
Related Concepts
Converting a percentage to a decimal involves dividing the percentage value by 100.
IRV stands for Income, Rate, and Value. It represents the relationship between Net Operating Income (I), Capitalization Rate (R), and Property Value (V).
Net Operating Income (NOI) is the revenue a property generates after deducting all operating expenses.
The gross rent multiplier (GRM) is a quick method for estimating the value of income-producing property by multiplying the property's gross rent by a factor derived from comparable sales. GRM = Sale Price / Gross Rent.
The capitalization rate (cap rate) is the ratio of a property's net operating income to its sale price, expressed as a percentage. It is used to estimate value and compare profitability of investment properties. Cap Rate = NOI / Value.
Frequently Asked Questions
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