How a real estate commission split works
The commission split is the percentage of each closed deal's commission that the agent keeps versus the percentage the brokerage keeps. A 70/30 split means 70% to the agent and 30% to the brokerage. The split applies to the commission the agent's side actually earns on the deal, not to the total commission the seller agreed to pay, which is usually shared between the listing side and the buyer side first.
Worked example: 70/30 on a $450,000 sale at 3%
Gross commission ($450,000 × 3%)$13,500.00
Brokerage share (30%)$4,050.00
Agent net (70%)$9,450.00
Every other rule on this page is a modification of that one line: something comes out before the split, the split changes partway through the year, or something comes out of the agent's share after the split. The order those happen in is what makes two brokerages with the "same" 70/30 plan pay different amounts.
The order of operations
The calculator applies the steps in this order, which is the most common structure. Where brokerages differ, the calculator gives you the choice.
- Gross commission. Sale price times the commission rate, or the dollar amount from the closing statement.
- Off the top. A referral fee (when the brokerage pays it before the split) and a franchise or royalty fee (when it is shared) leave here. What remains is the amount to split.
- The split. Agent percentage and brokerage percentage. If the agent has a cap, the brokerage's share of this step is what counts toward it.
- Agent-side deductions. An agent-paid transaction fee, a referral charged to the agent's side, a franchise fee the agent pays, E&O or other per-deal fees, and a team lead's override all come out of the agent's share.
- Client-paid fees. An admin or transaction fee charged to the buyer or seller goes to the brokerage and never touches the agent's number.
What a commission cap is
A cap is the most company dollar an agent pays the brokerage in a year. Only the brokerage's share of the split counts toward it; transaction fees usually do not. Once the agent has paid the cap, later deals go to a post-cap split, most often 100% to the agent, sometimes 95/5 or similar, until the cap year resets. Cap years run either on the calendar (January 1) or on the agent's anniversary date, and that choice matters for an agent who joins mid-year.
Worked example: $18,000 cap, $15,500 already paid, 70/30, $13,500 gross
Left to cap$2,500.00
Portion of the deal that fills the cap ($2,500 ÷ 30%)$8,333.33
Brokerage share on that portion (30%)$2,500.00
Remainder of the deal, 100% to the agent$5,166.67
Agent net$11,000.00
That is a deal that crosses the cap, split at the boundary. Some brokerages do not split at the boundary and instead apply the whole deal at whichever split was in force when it closed, so the agent either pays a little more than the cap on the crossing deal or the brokerage waives the difference. If that is your office's rule, use the "paid toward cap" field to see which side of the line the deal lands on and read the result accordingly.
Tiered splits versus caps
A tiered (or graduated) plan raises the agent's percentage in steps as production accumulates: 60/40 until a threshold, then 70/30, then 80/20. The threshold can be measured in company dollar paid, in gross commission, in sale volume, or in closed deals, and it can reset each year or accumulate for the agent's lifetime. Most brokerages apply the tier the agent is in at closing to the whole deal rather than splitting one deal across two tiers.
A cap ends the brokerage's share; a tier reduces it in steps. The calculator handles both: the cap section for a capped plan, and the tiered plan section for step schedules, with thresholds measured in commission or company dollar and your choice of whole-deal or split-at-the-boundary treatment. For tiers measured in sale volume or closed deals, enter the split for the tier the agent is currently in.
Where the fees come out
Transaction fee
A flat per-deal charge, often $150 to $500, sometimes called an admin, compliance, or E&O fee. When it is agent-paid it comes out of the agent's share and goes to the brokerage. When it is client-paid it is a line on the closing statement charged to the buyer or seller, and it goes to the brokerage in full. Some offices do both.
Franchise or royalty fee
Franchise brokerages pay a percentage of gross commission to the franchisor, commonly around 6%, sometimes capped per agent per year. Whether it comes off the top (shared by agent and brokerage), is charged to the agent, or is absorbed by the brokerage is a plan decision. Independent brokerages have no franchise fee, which is one reason the same nominal split can net an agent more at an independent.
Desk fees and monthly charges
Monthly desk fees, technology fees, MLS dues, and E&O premiums billed monthly are not part of a deal's math; they are billed to the agent separately. Leave them out of the calculator and compare them on an annual basis instead.
Referral fees: before or after the split
When an agent pays a referral fee to another agent or brokerage, typically 20% to 35% of the gross commission, the question is who absorbs it. Off the top means the referral is paid first and the agent and brokerage split what is left, so both sides share the cost. From the agent's share means the brokerage takes its full split of the gross and the agent pays the entire referral out of their side. On a 70/30 split with a 25% referral, the agent nets 52.5% of gross the first way and 45% the second way. It is worth asking which rule your office uses before you agree to a referral.
Team overrides
On a team, the team lead usually takes a percentage of each member's share after the brokerage's split, in exchange for leads, support, or brand. The calculator treats the override as a percentage of the agent's split. Team structures vary widely, so if your team's override is calculated on gross instead, enter the equivalent percentage of the agent's share.
