\u00a9 2020 wikiHow, Inc. All rights reserved. If you sold a house for $450,000 at 3% commission, your GCI is $13,500. Many calculators or phone apps have a percent key, which makes that easy. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


\n<\/p><\/div>"}. This article was co-authored by Carla Toebe. Your support helps wikiHow to create more in-depth illustrated articles and videos and to share our trusted brand of instructional content with millions of people all over the world. Let's take the same scenario above and add a few more complexities to the equation. The real estate commission calculator is a hbspt.cta._relativeUrls=true;hbspt.cta.load(7478877, '63ba8cdd-ede8-4c5e-bf52-a77088428452', {}); Depending on the size of your brokerage, you may have hundreds, if not thousands of transactions per month. It’s quite common for either the broker or agent to lose out due to incorrect calculations. Real estate commissions are the fees you pay to your real estate agent for their services. In addition, you may have a referral fee, a team member split, an admin fee, a transaction coordination fee, an E&O fee, etc. Now you have $10,125 remaining. Rate: 5.5%; Purchase Price: $200,000 → .055 x 200,000 = $11,000 Rate: 4.75%; Purchase Price: $325,000 → .0475 x 325,000 … We use cookies to make wikiHow great. http://www.nytimes.com/2014/10/26/business/an-extra-cost-in-american-home-sales.html?_r=0, http://www.investopedia.com/articles/personal-finance/080714/how-do-real-estate-agents-get-paid.asp, http://youngandthrifty.ca/real-estate-agent-commissions-decoded/, consider supporting our work with a contribution to wikiHow. Multiply the commission percentage by the purchase price to find out your total commission. Many real estate agents are willing to do this in tight markets, or if the house does not sell in a reasonable amount of time. What will a broker make for a sale of a home for 510,000 if the commission is 50 percent? For example, if the commission is 5 percent, multiply by .05 (move the decimal place over two spots). She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. In other words if you make a sale for $200 and your commission is 3%, your commission would be $200 * .03 = $6 ", "Glad I read this, it helped to explain the commission.". Then, multiply the purchase price by that number. Agents should get a deep understanding of their brokerage model, so they know what to expect. Human error lurks around the corner at all times -- you should always be prepared to double check commission calculations. How to Calculate Real Estate Salesperson Commissions. So unless you are legally considered an employee in your real estate brokerage (which is exceedingly rare), your broker will not withhold money from your commission checks for your taxes. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. This doesn’t happen because people have bad intentions. You get a commission by taking it from the selling price, not adding onto the net to the owner figure. You can also find a variety of real estate commission calculators online to make the calculation easier. There could also be title company charges that are normally paid by the seller; it just depends on your state. But, the real Estate License Exam will also expect you to have a good grip on this. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


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\u00a9 2020 wikiHow, Inc. All rights reserved. Multiply $400,000 by 106%: (1.06)(400,000) = $424,000. When you start to If you’re . With this tool, you'll be able to create a professional looking rent schedule and perform a detailed leasing commission calculation in a matter of minutes. That’s why it’s a good idea to automate commission calculations. How To Calculate What You Owe Your Real Estate Agent In Commission Once you’ve received an offer that is set in stone on your home, it is very easy to calculate the amount your agent will make. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


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\u00a9 2020 wikiHow, Inc. All rights reserved. Here's a guide to who pays, how much, and more. Generally, your contract with your agent is bound to a certain time period. ", "Just working out basic commission for a beginner in sales! We have made this tool freely available for use by the public (although note the disclaimer at the … This is where it often goes wrong. You’ll see incorrect commission go down, as your commission grows over time. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


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\u00a9 2020 wikiHow, Inc. All rights reserved. Unlock this expert answer by supporting wikiHow. Before appointing your agent, it is important to know For tips from our Real Estate reviewer on how to calculate the total cost of your house sale, read on! Now I'm not here to be Negative Nelly. For this section, assume you settled on a, Continuing the example, pretend this GA ranch is worth. Example: Real Estate Agent Noë aims to earn at least $150,000 as realtor this year. It doesn’t really matter whether you use a spreadsheet or a tailor-made tool. Most real estate agents are self-employed. Then click “Calculate” and you will get the sale proceeds from the property after all the real estate commissions and HST/GST on the commission are deducted. Please help us continue to provide you with our trusted how-to guides and videos for free by whitelisting wikiHow on your ad blocker. In most cases, both of those percentages are calculated against the GCI ($13,500). Commission: .06 X $40,000= $2,400. Example: Price is $40,000, commission 6 percent. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. We can assist by showing a list of top-performing real estate agents in your area through our agent comparison tool . A broker commission is 7% of the first $55,000, plus 5% of the sale price over $50,000. In this case, 82% of readers who voted found the article helpful, earning it our reader-approved status. To calculate a real estate commission, start by converting the commission percentage into a decimal by diving it by 100. Calculating Common Real Estate Commissions, {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/a\/af\/Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg\/v4-460px-Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg","bigUrl":"\/images\/thumb\/a\/af\/Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg\/aid2104670-v4-728px-Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg","smallWidth":460,"smallHeight":345,"bigWidth":"728","bigHeight":"546","licensing":"

\u00a9 2020 wikiHow, Inc. All rights reserved. Selling office received 40%. Noë will earn 3 For example: If your home = For many agents, the commission they get, is the right commission. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. If you sold a house for $150,000 at 5% commission, you receive $142,500 on the sale, or $150,000 - $7,500 in commission. A tiered commission rate is based on performance, and is used as a way to encourage real estate agents to get a higher sale price. Read more: The brokers guide to real estate commission structures, How to manage money for your real estate business, Why Honest Brokers Still Make Mistakes with Commission Checks. Related: See Zipi's real estate commission calculator and manager. Does payment of closing costs reduce the calculated real estate commission? This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. Carla Toebe is a licensed Real Estate Broker in Richland, Washington. What do you know? Note that gross sales price refers to the price of your home before any deductions are taken off. Step 3: Calculate real estate commission based on sales Since your real estate agent salary will likely be commission based, how much you make each year will depend on how many sales you have. That also means nobody is withholding earnings for the self-employment taxes. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. Then you still have your office split and company royalty, which brings the new total to $3,240. It was very easy to understand with the step-by-step explanation. Approved. If you don’t, you’ll almost certainly be losing out on tens of thousands of dollars every year. Most California real estate agents work on commission. Ask agents if they would be willing to reduce their commission. Ready? Let’s look at real estate agent taxes, salaries and commission. Agents don’t check their commission and brokers don’t check their split. Remember that you’ll essentially be paying the commission, so factor that in when you determine your asking price. On WOWA.ca, you can check real estate agent commissions . Metro vs. regional areas – the lowest is about 1.6% and the highest can be about 4% (or higher) . wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. If you buy or sell a real estate property, you may owe a commission to the brokers and agents involved in buying or selling the property. Last Updated: June 17, 2020 If you really can’t stand to see another ad again, then please consider supporting our work with a contribution to wikiHow. To estimate commission, simply multiply the percentage by the purchase price of the property. Every day at wikiHow, we work hard to give you access to instructions and information that will help you live a better life, whether it's keeping you safer, healthier, or improving your well-being. Using the above scenario, you're looking at $13,500 GCI (Gross Commission Income). Mistakes are bound to happen at some point. A real estate agent’s salary will depend on a lot of things. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. You’ll be surprised at how many commission checks are wrong! This real estate commission calculator tool will help you work out the approximate standard commission fees for various real estate agents throughout New Zealand. % of people told us that this article helped them. If they do not sell, they do not eat. So how is the commission calculated? So it’s important for everyone involved in a transaction to make sure the commission check is calculated and checked accurately every time. If you have a buyer's agent at a 50% split, you would payout $5,062.50 to them. Let’s walk through a few real-life example. Commissions are often paid by the home seller, and the overall commission is split by the agent who worked on behalf of the seller and the agent who represented the buyer, or between the listing broker and the selling broker. Figuring out Realtor Fees while trying to sell a home or condo in BC is especially tricky when Realtors have a complicated commission rate structure. Keep in mind, however, that selling your property without the services of a Realtor means that you will have to do everything, from paperwork to looking for a buyer to marketing your property. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. In addition to your splits, royalty, admin fee and TC fee, what if you had a buyer's agent or showing specialist? This article has been viewed 315,507 times. unlocking this expert answer. Real estate math is an essential part of the real estate exam and an important concept to understand to have a successful real estate career. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. Take the amount of purchase times the percentage of commission. Automation will make the process faster and more accurate. Remember to convert percentage to decimal first by dividing it by 100. Calculate each commission separately by multiplying the selling price by the specific applicable rate. For example, if commission was the only selling cost, and the ranch's purchase price is $200,000, and your total commission was $10,400, then you would have net proceeds of $189,600. The sole purpose of me writing this blog is to make sure that you are in business next year, and I’m not only talking to the new agents. Amid the current public health and economic crises, when the world is shifting dramatically and we are all learning and adapting to changes in daily life, people need wikiHow more than ever. In addition, you may have a referral fee, a team member split, an admin fee, a transaction coordination fee, an E&O fee, etc. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. No. The commission is based on the selling price without closing costs. Learning how commissions work and how they are calculated can help you to determine the cost of your property, or how much you will receive from a sale. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. Discussing percentages is foremost, because most commissions are based on a percentage of the sale price of a property. It is usually calculated as a percentage of the selling price of the property. The commission check calculation involves splits, caps, royalties, wraps, flat fees, and so on. It’s your and your agents’ job to verify that you’re getting paid correctly. Did you know you can read expert answers for this article? Their broker will provide support where needed. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. Pay day! This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved.

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\u00a9 2020 wikiHow, Inc. All rights reserved. If you sold a house for $450,000 at 3% commission, your GCI is $13,500. Many calculators or phone apps have a percent key, which makes that easy. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


\n<\/p><\/div>"}. This article was co-authored by Carla Toebe. Your support helps wikiHow to create more in-depth illustrated articles and videos and to share our trusted brand of instructional content with millions of people all over the world. Let's take the same scenario above and add a few more complexities to the equation. The real estate commission calculator is a hbspt.cta._relativeUrls=true;hbspt.cta.load(7478877, '63ba8cdd-ede8-4c5e-bf52-a77088428452', {}); Depending on the size of your brokerage, you may have hundreds, if not thousands of transactions per month. It’s quite common for either the broker or agent to lose out due to incorrect calculations. Real estate commissions are the fees you pay to your real estate agent for their services. In addition, you may have a referral fee, a team member split, an admin fee, a transaction coordination fee, an E&O fee, etc. Now you have $10,125 remaining. Rate: 5.5%; Purchase Price: $200,000 → .055 x 200,000 = $11,000 Rate: 4.75%; Purchase Price: $325,000 → .0475 x 325,000 … We use cookies to make wikiHow great. http://www.nytimes.com/2014/10/26/business/an-extra-cost-in-american-home-sales.html?_r=0, http://www.investopedia.com/articles/personal-finance/080714/how-do-real-estate-agents-get-paid.asp, http://youngandthrifty.ca/real-estate-agent-commissions-decoded/, consider supporting our work with a contribution to wikiHow. Multiply the commission percentage by the purchase price to find out your total commission. Many real estate agents are willing to do this in tight markets, or if the house does not sell in a reasonable amount of time. What will a broker make for a sale of a home for 510,000 if the commission is 50 percent? For example, if the commission is 5 percent, multiply by .05 (move the decimal place over two spots). She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. In other words if you make a sale for $200 and your commission is 3%, your commission would be $200 * .03 = $6 ", "Glad I read this, it helped to explain the commission.". Then, multiply the purchase price by that number. Agents should get a deep understanding of their brokerage model, so they know what to expect. Human error lurks around the corner at all times -- you should always be prepared to double check commission calculations. How to Calculate Real Estate Salesperson Commissions. So unless you are legally considered an employee in your real estate brokerage (which is exceedingly rare), your broker will not withhold money from your commission checks for your taxes. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. This doesn’t happen because people have bad intentions. You get a commission by taking it from the selling price, not adding onto the net to the owner figure. You can also find a variety of real estate commission calculators online to make the calculation easier. There could also be title company charges that are normally paid by the seller; it just depends on your state. But, the real Estate License Exam will also expect you to have a good grip on this. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


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\u00a9 2020 wikiHow, Inc. All rights reserved. Multiply $400,000 by 106%: (1.06)(400,000) = $424,000. When you start to If you’re . With this tool, you'll be able to create a professional looking rent schedule and perform a detailed leasing commission calculation in a matter of minutes. That’s why it’s a good idea to automate commission calculations. How To Calculate What You Owe Your Real Estate Agent In Commission Once you’ve received an offer that is set in stone on your home, it is very easy to calculate the amount your agent will make. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


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\u00a9 2020 wikiHow, Inc. All rights reserved. Here's a guide to who pays, how much, and more. Generally, your contract with your agent is bound to a certain time period. ", "Just working out basic commission for a beginner in sales! We have made this tool freely available for use by the public (although note the disclaimer at the … This is where it often goes wrong. You’ll see incorrect commission go down, as your commission grows over time. This image may not be used by other entities without the express written consent of wikiHow, Inc.
\n<\/p>


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\u00a9 2020 wikiHow, Inc. All rights reserved. Unlock this expert answer by supporting wikiHow. Before appointing your agent, it is important to know For tips from our Real Estate reviewer on how to calculate the total cost of your house sale, read on! Now I'm not here to be Negative Nelly. For this section, assume you settled on a, Continuing the example, pretend this GA ranch is worth. Example: Real Estate Agent Noë aims to earn at least $150,000 as realtor this year. It doesn’t really matter whether you use a spreadsheet or a tailor-made tool. Most real estate agents are self-employed. Then click “Calculate” and you will get the sale proceeds from the property after all the real estate commissions and HST/GST on the commission are deducted. Please help us continue to provide you with our trusted how-to guides and videos for free by whitelisting wikiHow on your ad blocker. In most cases, both of those percentages are calculated against the GCI ($13,500). Commission: .06 X $40,000= $2,400. Example: Price is $40,000, commission 6 percent. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. We can assist by showing a list of top-performing real estate agents in your area through our agent comparison tool . A broker commission is 7% of the first $55,000, plus 5% of the sale price over $50,000. In this case, 82% of readers who voted found the article helpful, earning it our reader-approved status. To calculate a real estate commission, start by converting the commission percentage into a decimal by diving it by 100. Calculating Common Real Estate Commissions, {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/a\/af\/Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg\/v4-460px-Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg","bigUrl":"\/images\/thumb\/a\/af\/Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg\/aid2104670-v4-728px-Calculate-Real-Estate-Commissions-Step-1-Version-4.jpg","smallWidth":460,"smallHeight":345,"bigWidth":"728","bigHeight":"546","licensing":"

\u00a9 2020 wikiHow, Inc. All rights reserved. Selling office received 40%. Noë will earn 3 For example: If your home = For many agents, the commission they get, is the right commission. She has been an active real estate broker since 2005, and founded the real estate agency CT Realty LLC in 2013. If you sold a house for $150,000 at 5% commission, you receive $142,500 on the sale, or $150,000 - $7,500 in commission. A tiered commission rate is based on performance, and is used as a way to encourage real estate agents to get a higher sale price. Read more: The brokers guide to real estate commission structures, How to manage money for your real estate business, Why Honest Brokers Still Make Mistakes with Commission Checks. Related: See Zipi's real estate commission calculator and manager. Does payment of closing costs reduce the calculated real estate commission? This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. Carla Toebe is a licensed Real Estate Broker in Richland, Washington. What do you know? Note that gross sales price refers to the price of your home before any deductions are taken off. Step 3: Calculate real estate commission based on sales Since your real estate agent salary will likely be commission based, how much you make each year will depend on how many sales you have. That also means nobody is withholding earnings for the self-employment taxes. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. Then you still have your office split and company royalty, which brings the new total to $3,240. It was very easy to understand with the step-by-step explanation. Approved. If you don’t, you’ll almost certainly be losing out on tens of thousands of dollars every year. Most California real estate agents work on commission. Ask agents if they would be willing to reduce their commission. Ready? Let’s look at real estate agent taxes, salaries and commission. Agents don’t check their commission and brokers don’t check their split. Remember that you’ll essentially be paying the commission, so factor that in when you determine your asking price. On WOWA.ca, you can check real estate agent commissions . Metro vs. regional areas – the lowest is about 1.6% and the highest can be about 4% (or higher) . wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. If you buy or sell a real estate property, you may owe a commission to the brokers and agents involved in buying or selling the property. Last Updated: June 17, 2020 If you really can’t stand to see another ad again, then please consider supporting our work with a contribution to wikiHow. To estimate commission, simply multiply the percentage by the purchase price of the property. Every day at wikiHow, we work hard to give you access to instructions and information that will help you live a better life, whether it's keeping you safer, healthier, or improving your well-being. Using the above scenario, you're looking at $13,500 GCI (Gross Commission Income). Mistakes are bound to happen at some point. A real estate agent’s salary will depend on a lot of things. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. You’ll be surprised at how many commission checks are wrong! This real estate commission calculator tool will help you work out the approximate standard commission fees for various real estate agents throughout New Zealand. % of people told us that this article helped them. If they do not sell, they do not eat. So how is the commission calculated? So it’s important for everyone involved in a transaction to make sure the commission check is calculated and checked accurately every time. If you have a buyer's agent at a 50% split, you would payout $5,062.50 to them. Let’s walk through a few real-life example. Commissions are often paid by the home seller, and the overall commission is split by the agent who worked on behalf of the seller and the agent who represented the buyer, or between the listing broker and the selling broker. Figuring out Realtor Fees while trying to sell a home or condo in BC is especially tricky when Realtors have a complicated commission rate structure. Keep in mind, however, that selling your property without the services of a Realtor means that you will have to do everything, from paperwork to looking for a buyer to marketing your property. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. In addition to your splits, royalty, admin fee and TC fee, what if you had a buyer's agent or showing specialist? This article has been viewed 315,507 times. unlocking this expert answer. Real estate math is an essential part of the real estate exam and an important concept to understand to have a successful real estate career. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. Take the amount of purchase times the percentage of commission. Automation will make the process faster and more accurate. Remember to convert percentage to decimal first by dividing it by 100. Calculate each commission separately by multiplying the selling price by the specific applicable rate. For example, if commission was the only selling cost, and the ranch's purchase price is $200,000, and your total commission was $10,400, then you would have net proceeds of $189,600. The sole purpose of me writing this blog is to make sure that you are in business next year, and I’m not only talking to the new agents. Amid the current public health and economic crises, when the world is shifting dramatically and we are all learning and adapting to changes in daily life, people need wikiHow more than ever. In addition, you may have a referral fee, a team member split, an admin fee, a transaction coordination fee, an E&O fee, etc. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. No. The commission is based on the selling price without closing costs. Learning how commissions work and how they are calculated can help you to determine the cost of your property, or how much you will receive from a sale. This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved. This image is not<\/b> licensed under the Creative Commons license applied to text content and some other images posted to the wikiHow website. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. Discussing percentages is foremost, because most commissions are based on a percentage of the sale price of a property. It is usually calculated as a percentage of the selling price of the property. The commission check calculation involves splits, caps, royalties, wraps, flat fees, and so on. It’s your and your agents’ job to verify that you’re getting paid correctly. Did you know you can read expert answers for this article? Their broker will provide support where needed. wikiHow, Inc. is the copyright holder of this image under U.S. and international copyright laws. Pay day! This image may not be used by other entities without the express written consent of wikiHow, Inc.
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\u00a9 2020 wikiHow, Inc. All rights reserved.

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