What is the rate of commission (R)?

• A. The commission expressed as a percentage of the sales price
• B. The sales price
• C. The profit
• D. The market value of the property

Answer: (A)

R is the portion of the sale price that represents the broker’s fee, expressed as a percentage. In practice, the commission is found by applying this percentage to the sales price: Commission = (R/100) × Sales Price. This is why it’s described as a percentage of the price, not the price itself, not the profit, and not the market value. For example, if a property sells for $420,000 and the commission rate is 5%, the commission would be $21,000. The sales price is the base used in the calculation, while profit is the seller’s net after costs, and market value is an appraisal estimate of worth—these are different ideas from the rate itself.