Commission = Sale Price x Commission Rate. Worked examples, the reverse calculation the NY exam prefers, and the mistakes that cost marks.
How to solve it, step by step
- Convert the percentage to a decimal — 6% becomes 0.06.
- Identify the sale price, not the list price. Commission is paid on what the property actually sold for.
- Multiply: sale price × decimal rate.
- Check what the question asked for. Total commission, one brokerage’s share, and one agent’s share are three different numbers.
Worked examples
What the NY exam actually asks
Most NY commission questions do not stop at the total. They ask what one agent actually banks, which means the total commission is only step one of three. Read to the end of the question before you compute anything.
Try one yourself
A property lists at $450,000 and sells for $435,000. The total commission is 5%. What is the total commission paid?
Show the answer
$21,750. Use the sale price of $435,000, not the list price: $435,000 × 0.05 = $21,750. The $450,000 list price is there to mislead you.
Common mistakes
- Using 6 instead of 0.06. A percent must become a decimal before you multiply.
- Answering with the total commission when the question asked for the listing agent’s share.
- Applying the rate to the list price when the property sold for a different number. Commission is always paid on the sale price.
Questions students ask
Is commission paid on the list price or the sale price?
Always the sale price. A list price in the question is usually a distractor.
Are real estate commissions set by law in New York?
No. Commission rates are negotiable between the seller and the broker. Any suggestion of a standard or fixed rate raises antitrust problems.
Related formulas
- How commission splits are calculated
- The T-method
- All 12 formulas — NY Real Estate Math Cheat Sheet
- Real Estate Math Calculator