How to calculate your net commission

Start with the gross commission on your side

The commission on a sale is usually a percentage of the sale price, split between the listing brokerage and the buyer's brokerage. Your side of that split is the gross commission paid to your brokerage.

Example: a $500,000 sale with 2.5% paid to your side is a gross commission of $12,500 to your brokerage.

Subtract your brokerage split

Your brokerage keeps its share under your independent-contractor agreement. On a 70/30 split, you keep 70%.

• $12,500 × 70% = $8,750

If you are on a cap model and have already capped for the year, your split may be 100% for this deal.

Subtract fees taken from the commission

Common deductions, depending on your brokerage:

• Franchise or royalty fees
• Per-transaction or desk fees
• E&O insurance fees charged per deal
• A referral fee, if the client came from another agent

Suppose they total $450. Your net commission is $8,750 − $450 = $8,300.

Your brokerage's commission statement (sometimes called a trade sheet or commission disbursement authorization) shows these numbers for a specific deal. That is the figure an advance is based on.

How much of it you can advance

• Residential resales: up to 90% of your net commission. On $8,300, that is up to $7,470.
• All other deals: up to 80% of your net commission.

You choose the amount. Advance only what you need; the fee is a percentage of the amount advanced, so a smaller advance costs less in dollars.

Common mistakes

• Using the gross commission. An advance is based on what you take home, not on the full commission paid to your brokerage.
• Forgetting the referral fee. If you owe one, it comes off before you are paid.
• Assuming the split. Splits can change mid-year on cap or tiered plans. Check your commission statement for this deal.