To calculate brokerage fees, multiply the transaction value by the agreed rate expressed as a decimal. A $400,000 home sale at a 2.75% listing commission produces an $11,000 fee ($400,000 × 0.0275). A $300,000 investment portfolio at a 1% annual advisory fee costs $3,000 per year. The formula is that simple, but getting the right number depends on knowing which fee structure your agreement uses, and in real estate, who is paying for which side of the transaction.
The Percentage Formula
Brokerage Fee = Transaction Value × (Rate ÷ 100)
Convert the rate to a decimal and multiply. A 5.5% commission on a $400,000 sale is $22,000. A 2.5% commission on the same sale is $10,000. Use the actual closing price from the purchase agreement, not the listing price or an estimate, because the commission is calculated on what the property actually sold for.
Antitrust law requires every brokerage to set its own rates independently, so there is no standard number to plug in. Whatever rate appears in your signed agreement is the rate you use.1Federal Trade Commission. Price Fixing
Calculating Real Estate Commissions After the NAR Settlement
If you are running numbers on a home sale or purchase in 2026, you can no longer assume a single commission rate covers both agents. The National Association of Realtors settlement that took effect in August 2024 changed the mechanics.2Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation
Sellers’ agents can no longer advertise commission offers to buyers’ agents through MLS listings, and sellers are no longer required to compensate the buyer’s agent at all.2Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation Buyers now sign a written buyer representation agreement before touring a home. That agreement states a specific, objectively ascertainable amount their agent will be paid, and the agent cannot collect more than that amount from any source combined.3National Association of REALTORS®. Written Buyer Agreements 101
For your calculation, this means you work the two sides independently:
- If you are the seller: Multiply the sale price by the rate in your listing agreement. If you also agreed to offer a concession toward the buyer’s agent fee, calculate that amount separately and add it. A seller on a $400,000 sale paying 2.75% to their own agent and offering a 2.5% buyer-side concession owes $11,000 + $10,000 = $21,000 total.
- If you are the buyer: Multiply the purchase price by the rate in your buyer representation agreement. Whether the seller covers any portion of that depends on what, if anything, was negotiated as a concession. If no concession applies, you owe the full amount.
Sellers can still offer concessions that help cover a buyer’s agent fee, but it is no longer automatic or standardized, so your buyer-side calculation starts from the assumption that you owe your own agent in full and gets adjusted downward only if a concession was actually negotiated.
Flat Fees and Tiered Rates
Flat fees need no math. If your agreement states a $5,000 service fee, $5,000 is what appears on the settlement statement whether the property closes at $200,000 or $500,000. The tradeoff is predictability versus proportionality: on a lower-priced transaction, a flat fee can end up higher than a percentage would have been.
Tiered or bracket arrangements apply different rates to different portions of the transaction value. You calculate each bracket separately and add the results.
For a broker charging 5% on the first $100,000 and 3% on anything above that, a $250,000 transaction works out this way:
- First $100,000 × 0.05 = $5,000
- Remaining $150,000 × 0.03 = $4,500
- Total: $9,500
The effective rate is 3.8% ($9,500 ÷ $250,000), lower than the top-bracket rate. Larger transactions pull the effective rate further toward the lowest tier. Tiered structures appear most often in commercial real estate and some investment advisory relationships.
Calculating Investment Account Fees
For investment advisors who charge based on assets under management, the formula is the same as a real estate percentage, but the fee is usually billed in quarterly installments rather than once at closing. An advisor charging 1% annually on $300,000 collects $3,000 per year, typically $750 per quarter. Human advisors commonly charge around 1% of AUM; robo-advisors generally fall between 0.25% and 0.50%.
Tiered AUM schedules are common at higher balances. An advisor might charge 1% on the first $500,000, 0.75% on the next $500,000, and 0.50% on anything above $1 million. Apply each rate to its own bracket and add the results, the same way you would calculate a tiered real estate commission.
For stock and ETF trades through a standard online brokerage account, your per-trade commission is likely $0. Major online brokerages eliminated those commissions starting in 2019. Fees still apply to options contracts (usually per contract), mutual fund transactions, broker-assisted trades, and advisory services. Expense ratios on mutual funds and ETFs are built into the fund’s returns rather than billed to you directly, but they still reduce what you keep.
How These Fees Affect Your Taxes
The fee you calculate is not just an out-of-pocket cost. It also changes what you owe at tax time, and the treatment depends on what kind of transaction it is.
Selling a home. Real estate commissions count as selling expenses that reduce your amount realized. Sell for $400,000, pay $21,000 in commissions, and your amount realized is $379,000. Subtract your cost basis from that figure to find your gain or loss.4Internal Revenue Service. Publication 523, Selling Your Home For homeowners who qualify for the $250,000 single or $500,000 married capital gains exclusion on a primary residence, commissions can push the taxable gain to zero even on a significantly appreciated home.
Buying investments. Commissions and acquisition fees get added to your cost basis rather than deducted separately.5Internal Revenue Service. Publication 550 (2024), Investment Income and Expenses Pay $10,000 for shares plus a $50 commission, and your basis is $10,050. Sell those shares later for $15,000, and your taxable gain is $4,950, not $5,000.
Redeeming mutual funds. Fees paid to redeem shares reduce the sales price rather than increase the basis, but the effect on your taxable gain is the same.5Internal Revenue Service. Publication 550 (2024), Investment Income and Expenses
Annual advisory fees. AUM fees paid out of a taxable account are generally not deductible for individual investors under current tax law. They still reduce your account balance, which reduces future gains, but they do not show up as a deduction on your return.
Where to Find Your Actual Rate
You cannot run the numbers without the rate, and the rate lives in whatever you signed. For a home sale, that is the listing agreement. For a home purchase, it is the buyer representation agreement. Both documents state the rate or flat amount in plain terms. If you signed months ago, ask your agent for a copy before closing so you can check the Closing Disclosure line items against it.
For investment accounts, the fee schedule is in your account opening documents or posted as a separate disclosure on the brokerage’s website. Look for the terms expense ratio, advisory fee, AUM fee, and transaction fee, depending on account type.6NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. Informed Investor Advisory: Understanding Broker-Dealer Fees If you cannot find a current schedule, ask for one in writing before committing any assets.