Traditional Model of Real Estate
Chart 1
For our example let's say the house was sold for $300,000 and the seller agreed to pay the listing company 5% of the selling price. It was also agreed that the listing company would offer half of the commission, or 2.5%, to the company that produced a buyer and keep the other half, or remaining 2.5%, for their services. When the house closes both companies will each receive $7,500.

$300,000 x 5% = $15,000 commission.

$15,000 x 50% = $7,500. Listing Company's commission

$15,000 x 50% = $7,500. Buying Company's commission

Of course, the Realtors involved would like to get paid some of those commission dollars. John, the listing agent, worked out a 60/40 split with the company when he was hired. This simply means that whatever money he makes for the company, he is allowed to keep 60%; the remaining 40% will stay with the company. In this case John made $4,500 and the company kept the remaining $3,000.

$7,500 x 60% = $4,500. This is John's commission.

$7,500 x 40% = $3,000. This is the Listing Company's commission.

Mary, the buyer's agent, has a 50/50 split with her company. In this case the commission would be cut in half and both Mary and her company will each receive $3,750.

$7,500 x 50% = $3,750. This is Mary's commission.

$7,500 x 50% = $3,750. This is the Buying Company's commission.

Non-Traditional Real Estate
Chart 2
Keeping consistent with the above example, if the seller hired our company, the commission would be $347 and 2.5% for a total of $7,847.

Listing Fee: $347

$300,000 x 2.5% = $7,500. Buying Company's commission.

This would be a total savings of $7,153.

$15,000 Traditional commission

$ 7,847 Non-traditional commission

$ 7,153 Total Savings