How do realtors calculate their commisison when selling or finding a home for a customer? When signing closing escrow or loan documents this amount is just stated but not explained. Here is a sample scenario :
John , a real estate salesperson , found a buyer for a $600,000.00 house, The seller agreed to pay a 6 % commission on the sale to John`s broker. John is on a 50% - 50 % with his broker. WHAT IS THE AMOUNT OF HIS COMMISION?
Known: P (Sales Price , $) and R (Commission Rate %)
P = $600,000.00
R = $ 6 % or 0.06
Unknown: I (Commision Income, $)
What we do not know is the dollar amount of the commission paid to the salesperson John. First, the total commission paid to the broker must be calculated, then calculate the amount due to John.
Formula: I = P x R, or Commission Income = Sales Price x Rate
I = P x R
I = $600,000.00 x 0.06
I = $36,000.00 (Total commission earned by the broker)
Johns Commission = 1/2 fo the total commission earned
Johns Commission = $36,000.00 divided by 2
Johns Commision = $18,000.00
Different brokers offer different splits to their agents in order to pay overhead and to maintain their profit margin. For instance is Johns Broker Paid him 70 % then John would earn exactly $12,600.00
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