Calculating Sales Commission

Question 1

Sale Price x Commission rate = total commission
total commission x percentage to listing brokerage = listing commission
listing commission x listing sales associate percentage = listing sale associate commission
total commission x percentage to selling brokerage = selling commission
selling commission x buyers sale associate percentage = buyers sale associate commission

Answer 1

Example formula - note in this example the property is listed and sold by the same sales associate.
Suppose a brokers listing agreement specifies that a 6.5% commission is to be paid on the sale price. A sales associate for the firm lists and sells the property and is to receive 55% of the 6.5% sale commission. How much will the sales associate earn after selling the property for $62,000?

Question 2

Solution:
Step 1 -Find the total sales commission
62,000 sale price x .065 rate = 4,030 total commission
Step 2- Find the sales associates commission
4,030 x .55 = 2, 216.50 sales associate commission

Answer 2

Example : A property is listed with one brokerage company and sold by another brokerage through MLS.
A brokers listing agreement specifies that a 7% commission is to be paid on the sale price. The agreement specifies a 50-50 split between the listing and the selling offices. If the property sells for 100,000, how much commission is earned by the listing and selling offices?

Question 3

Step 1- Find the total sales commission
100,000 sales price x .07 rate = 7,000 commission
Step 2- Find the selling and listing offices split
7,000 x.55 = $3500.00 split commission selling and listing commission

Answer 3

Another commission example ;
The broker has a listing with the seller, and the parties agree to graduated commission structure. The commission is 5% on the first 200,000 of sale price. 6.5% on the next $100,000 of sale price, and 8% on the amount over $300,000. What is the total commission if the property sells for $325,000?

Question 4

Step 1 - Calculate the first increment of commission
200,000 x .05 = $10,000 first increment commission
Step 2- Calculate the second increment of commission
100,000 x .065=$6500 second increment commission
Step 3 - Calculate the third increment commission
25,000 remaining portion x .08 = 2,000 third increment commission
Step 4 - Add the increment commissions to determine the total commission
10.000 + 6500 + 2000 = 18,500 total commission

Answer 4

Formula : Solving Percent Problems
Part / total = rate
Part / rate = total
total x rate = part

Question 5

Example : A property sold for $100,00. The commission was 7% of the sale price. What was the commission?
Rate = 7%
Total = 100,000
The formula indicates that to solve for the commission (part), we must multiply the total sales price by the rate
100,000 sales price x .07 = $7,000 total commission

Answer 5

Example : A competing real estate company sold your neighbors home for $200,000. The seller indicated that the commission on the sale was 13,000. What percentage of the commission did the real estate company charge?
The formula indicates to solve the rate of commission (rate) we must divide the commission by the sales price :
Part / total = rate
$13,000 / 200,000 = .065 or 6 1/2