Commissions, profit, and net to seller
Most exam math is one idea used over and over: part = whole × rate. Find which two of the three you know, and solve for the third.
| You want | Formula |
|---|---|
| Part (commission, profit, down payment) | whole × rate |
| Whole (sales price, loan amount) | part ÷ rate |
| Rate (commission rate, percent profit) | part ÷ whole |
Commission splits
A commission usually gets cut more than once. Work each cut in order, applying each percentage to the result of the step before.
- Total commission = sales price × commission rate.
- Listing side and selling side split that total (often 50/50, but the problem will say).
- Each brokerage then splits its share with its sales associate.
A $400,000 sale at 6% earns $24,000. Split 50/50 between brokerages, each side gets $12,000. If the associate's plan pays 70%, the associate earns $8,400.
Tiered commissions
Some listing agreements charge one rate on the first part of the price and another rate on the rest. Calculate each tier separately and add them. 7% on the first $100,000 and 3% on the balance of a $250,000 sale is $7,000 + $4,500 = $11,500.
Percent profit or loss
Percent profit is always measured against what the owner paid, not the sale price.
Percent profit = (sale price − cost) ÷ cost
Net to seller
When a seller names the amount they want to walk away with, the commission is still charged on the full price. Add any flat costs to the desired net, then divide by the share the seller keeps (100% minus the commission rate). Dividing, not multiplying, is the step most people miss.