True Cost of Real Estate Commission Calculator
Calculate the real cost of real estate commissions including interest and loan impacts
Property Purchase Details
Total purchase price of the property
20.0% of property price
Commission paid by seller (typically 6%)
Additional commission paid by buyer (typically 0%)
Mortgage Details
80.0% LTV ratio
360 months total
Annual percentage rate (APR)
Commission Cost Analysis
Cost Impact Analysis
Example Calculation
Typical Home Purchase
Property Price: $400,000
Down Payment: $80,000 (20%)
Seller Commission: 6% ($24,000)
Buyer Commission: 0% ($0)
Loan Amount: $320,000
Loan Term: 30 years at 7.83%
True Cost Calculation
Commission at sale: $24,000
Commission financed: $24,000 (fully financed)
Interest on commission over 30 years: ~$32,000
True commission cost: ~$56,000
133% more than apparent cost!
Commission Quick Facts
Traditional Rate
6% total commission is standard
Usually split between agents
Hidden Costs
Interest compounds commission cost
Can double the actual expense
Buyer Impact
Commission affects purchase price
Buyers indirectly pay seller commission
Commission Structure
Listing agent commission (seller pays)
Buyer agent commission (seller pays)
Commission split between brokerages
Additional fees may apply
Recent Changes: Some markets are moving toward buyer-paid commissions following recent legal developments.
Understanding the True Cost of Real Estate Commissions
What is Real Estate Commission?
Real estate commission is a fee paid to real estate agents for their services during property transactions. Traditionally, this fee is around 6% of the property's sale price and is typically paid by the seller, though it's often built into the property's asking price.
Why Calculate True Cost?
- •Reveals hidden costs from mortgage interest
- •Shows long-term financial impact
- •Helps in negotiating commission rates
- •Enables informed decision making
How Interest Affects Commission
When you finance a home purchase, the commission becomes part of your loan amount if your down payment doesn't cover the total cost. This means you'll pay interest on the commission amount over the entire loan term, significantly increasing the true cost.
Example Impact:
- • Commission at sale: $24,000
- • Interest over 30 years: ~$32,000
- • True cost: $56,000 (133% increase!)
Important: The longer your loan term and higher your interest rate, the more you'll pay in true commission costs.
Recent Industry Changes
Recent legal developments, including the Missouri court verdict against the National Association of Realtors (NAR), have highlighted concerns about commission structures. These changes may lead to:
- •More transparent commission structures
- •Potential separation of buyer/seller commissions
- •Increased competition and lower rates
- •More negotiable commission terms