A property sells for $310,000 at a commission rate of 5.5%. What is the total commission?
Correct Answer
B) $17,050
Use the commission formula: $310,000 × 5.5% = $17,050. That is the total commission paid from the sale proceeds.
Why This Is the Correct Answer
Use the commission formula: $310,000 × 5.5% = $17,050. That is the total commission paid from the sale proceeds.
Why the Other Options Are Wrong
Option A: $8,525
This amount comes from using only half the commission rate or otherwise cutting the rate in half.
Option C: $170.50
This amount comes from moving the decimal twice and treating the percentage incorrectly.
Option D: $20,150
This amount comes from using the wrong commission rate.
Deep Analysis of This Real Estate Math Question
This straightforward commission calculation demonstrates the direct proportional relationship between sale price and agent compensation. The 5.5% rate represents the total cost of real estate services as a percentage of the property's market value, ensuring compensation scales appropriately with property values.
Background Knowledge for Real Estate Math
Commission rates like 5.5% became standardized in many markets during the mid-20th century as the Multiple Listing Service (MLS) system developed. These rates were established to provide fair compensation for marketing services, negotiations, and transaction coordination across varying property values.
Memory Technique
For percentage calculations, remember 'Move the decimal twice to the left' - 5.5% becomes 0.055. Then use 'Price × Percent = Payment' to remember the multiplication formula for commission calculations.
Exam Tip for Real Estate Math
When you see a sale price and commission rate with the question asking for 'total commission,' it's always simple multiplication. Convert the percentage to decimal form and multiply - don't overthink these straightforward calculation problems.
Real World Application in Real Estate Math
On a $310,000 sale with 5.5% commission totaling $17,050, this amount typically covers marketing costs, MLS fees, photography, agent time for showings and negotiations, and brokerage overhead. The commission is usually split equally between listing and selling brokerages at closing.
Related Topics & Key Terms
Key Terms:
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