This section provides examples for calculating commission amounts based on sales prices, which are usually expressed as a percentage of the sale price To assist in this process, refer to the "T" chart below for proper organization of the calculations.
To calculate commission, you can use different methods based on the information provided If you have the sale price and the commission rate, multiply the sale price by the commission rate to find the commission earned Conversely, if you know the commission amount and the rate, divide the commission by the rate to determine the sale price Finally, if you possess both the commission amount and the sale price, divide the commission by the sale price to calculate the commission rate.
Let's explore common issues and calculations related to commissions to better understand the topic Before checking the solutions at www.pdfgrip.com, attempt to solve the problems independently, just as you did with the previous examples.
The sellers received $95,000 for their property and paid a 6% commission to their broker To calculate the commission amount, you multiply the sale price by the commission rate, resulting in a total commission of $5,700 For more details, visit www.pdfgrip.com.
The sellers sold their property for $95,000 They paid the broker a 6% commission How much did they pay in commission to the broker? a $1,401 b $2,500 c $5,700 d $7,300
To effectively use the T formula for math problems, place the sale price on the left side and the rate on the right side, ensuring to multiply them side by side Familiarizing yourself with the % key on your calculator is essential, as it simplifies calculations For instance, by entering the sale price, pressing the multiplication key, inputting 6, and then hitting the % key, you can directly obtain the answer without converting the percentage to a decimal Always input the full number without shortcuts in all calculations If you're using a more advanced calculator, remember to press the = key to get the correct answer If you don't arrive at the answer of 5,700, make sure to use the = key for every problem you solve.
A house sold for $165,000, and the total commission received by the broker was $12,375 What was the rate of commission? a 5.6% b 7.5% c 8.5% d 9.75%
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A house sold for $165,000, and the total commission received by the broker was $12,375 What was the rate of commission? a 5.6% b 7.5% c 8.5% d 9.75%
To calculate the commission percentage, use the T formula by placing the commission amount of $12,375 at the top and the sale price of $165,000 on the left side Remember, commissions are based on the sale price, not the list price, unless they are identical To find the percentage, divide the top number by the bottom number by entering $12,375 into the calculator, pressing the division key, then entering $165,000 and pressing the % key, followed by = This will yield a commission rate of 7.5%, with no need to convert the result into a dollar amount For more details, visit www.pdfgrip.com.
The seller agreed to a purchase price of $360,000 and a 6% commission, resulting in a total commission of $21,600 This amount will be debited from the seller on the settlement statement, reflecting the transaction's financial obligations The listing broker will split this fee with the selling broker, ensuring that both parties receive their respective commissions.
See if you can figure this out before you go to the following page for the correct answer
Remember: The full amount of the commission goes on the settlement statement www.pdfgrip.com
The agreed purchase price for the property was $360,000, with the seller responsible for a 6% commission fee This results in a total commission of $21,600, which is debited from the seller's proceeds on the settlement statement The listing broker and selling broker split this commission, reflecting the seller's obligation in the transaction.
The sale price and the commission call for you to place the sale price of $360,000 on the left of the T, and the
6% on the right side and multiply
Remember: The full amount of the commission goes on the settlement statement www.pdfgrip.com
The property was initially listed at $275,000, and after a buyer's offer of $265,000, the seller countered with $272,500, which the buyer accepted Additionally, the seller agreed to compensate the listing broker for their services.
7% commission at closing What is the amount of commission due the listing broker, and how would it appear on the settlement statement?
Be careful here of the "detractors" in the question a $15,900 - Credit the buyer b $19,075 - Debit the seller c $19,250 - Credit the seller d $20,900 - Debit the seller www.pdfgrip.com
A property listed at $275,000 received an offer of $265,000 from a buyer, prompting the seller to counter with a price of $272,500, which the buyer ultimately accepted The seller also agreed to compensate the listing broker for their services.
7% commission at closing What is the amount of commission due the listing broker, and how would it appear on the settlement statement?
Be careful here of the "detractors" in the question a $15,900 - Credit the buyer b $19,075 - Debit the seller c $19,250 - Credit the seller d $20,900 - Debit the seller
Correct Answer: B $272,500 × 7% = 19,075 debit the seller
The only amount you are concerned with in this problem is the agreed upon sale price and the commission rate The offer and counter offer are detractors
-related question on the following page www.pdfgrip.com
A home was listed for $195,000 and sold for 90% of the list price, totaling $175,500 With a selling commission of 7.5%, the total commission amounted to $13,125 The selling broker, receiving 45% of the commission, earned $5,906.25 from the sale.
Watch out for a similar question that might say, "The seller sold the property for $195,000 WHICH WAS 90%
OF THE LIST PRICE." The answer would be different! a $14,625 b $13,162.50 c $5,923.13 d $7,239.38
Can you solve this before going forward to the next page? Try it and see! www.pdfgrip.com
A home was listed for $195,000 and sold for 90% of that price, totaling $175,500 With a selling commission of 7.5%, the total commission earned on the sale amounted to $13,125 The commission was split between the listing broker, receiving 55%, and the selling broker, who received 45% Consequently, the selling broker earned $5,906.25 from the sale.
Watch out for a similar question that might say, "The seller sold the property for $195,000 WHICH WAS 90%
OF THE LIST PRICE." The answer would be different! a $14,625 b $13,162.50 c $5,923.13 d $7,239.38
To solve the problem, first calculate 90% of the sale price by multiplying $195,000 by 90%, resulting in $175,500 Next, determine the full commission amount by calculating $175,500 multiplied by 7.5%, which equals $13,162.50 To find out how much the selling broker earned, take 45% of the total commission, resulting in $5,923.13.
If you were asked how much the listing broker had earned, then the answer would be D www.pdfgrip.com
Sally earned a total of $85,000 in commission for the year, receiving 4.5% on her sales up to $500,000 and 6% on any sales exceeding that threshold To calculate her total sales, we first determine the commission from the first $500,000, which amounts to $22,500 The remaining commission of $62,500 corresponds to the 6% earned on sales exceeding $500,000 By solving the equation for the sales over $500,000, we find that Sally's total sales for the year were approximately $1,083,333.
To calculate her total sales volume, first determine her earnings for the initial $500,000 and subtract that amount from her overall earnings Next, divide the remaining figure by 6% Finally, sum the two totals to arrive at her total sales volume, which could be one of the following options: a $1,041,666.67, b $1,541,666.67, c $1,651,001.67, or d $2,100,999.67 For more information, visit www.pdfgrip.com.