Commission Split and Seller Net on a $685,000 Sale
Broker Evelyn's firm, Blue Crab Realty, lists a $685,000 Annapolis home at a total commission of 5.5%. The cooperating buyer's brokerage receives 2.75%, and Blue Crab keeps 2.75%. Evelyn's independent contractor agreement gives her 70% of the listing side, with the broker keeping 30%. Blue Crab pays a 6% franchise fee on its listing-side commission before the agent split. Evelyn has a 15% referral obligation to a lead-generation company based on her gross commission, and she pays a $450 per-transaction fee to Blue Crab. The seller's mortgage payoff is $412,000. Seller closing costs are $9,800, and the seller agreed to a $4,500 repair credit. The seller also paid $1,200 for a survey before listing, which is not a closing cost. The lead company is not a licensed brokerage and did not perform brokerage services.
1. Calculate Blue Crab's total commission, the listing side, and Evelyn's net commission after the franchise fee, split, referral, and transaction fee.
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Total commission: $685,000 × 5.5% = $37,675. The buyer's brokerage receives 2.75% = $18,837.50, and Blue Crab's listing side is also 2.75% = $18,837.50.
Blue Crab's franchise fee is 6% of its listing-side commission: $18,837.50 × 0.06 = $1,130.25. Subtract that before the split: $18,837.50 − $1,130.25 = $17,707.25. Evelyn's 70% share is $17,707.25 × 0.70 = $12,395.08 (rounded). Her 15% referral obligation is based on her gross commission: $12,395.08 × 0.15 = $1,859.26. She also pays the $450 transaction fee. Evelyn's net is $12,395.08 − $1,859.26 − $450 = $10,085.82. The broker retains $5,312.18 before the franchise fee is considered, and the franchise fee reduces the listing-side pool before the split.
2. Calculate the seller's net proceeds at closing and explain how the pre-listing survey is treated.
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Start with the sale price of $685,000. Subtract the total commission of $37,675, the mortgage payoff of $412,000, seller closing costs of $9,800, and the repair credit of $4,500. The calculation is $685,000 − $37,675 = $647,325; $647,325 − $412,000 = $235,325; $235,325 − $9,800 = $225,525; $225,525 − $4,500 = $221,025. The seller's net proceeds at closing are $221,025.
The $1,200 survey was paid before listing and is not a closing cost, so it is not deducted on the settlement statement. If the seller asks for overall cash position rather than closing proceeds, the survey would reduce it to $219,825. The distinction matters because a settlement statement should show only items charged or credited at closing. The repair credit is a seller concession and reduces proceeds; the commission and payoff are also closing deductions.
3. May Blue Crab pay the lead-generation company? What conditions and disclosures apply?
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The key question is whether the lead company performed brokerage services. If it merely provided a lead and did not negotiate, show property, advise on price, or otherwise perform licensed brokerage activity, a referral fee may be permissible under Maryland law, but the broker must verify the current rule and ensure the payment is not a disguise for unlicensed brokerage. If the company did any brokerage activity, payment is prohibited.
Blue Crab should have a written referral agreement, disclose the fee to the affected party as required, and document that the company is unlicensed and provided only a referral. The fee should be paid through the brokerage, not directly by Evelyn, and the broker should confirm that the 15% calculation is based on the agreed gross commission. The broker should also check whether the referral fee must be reflected on the settlement statement or in the file. If the company solicited clients or negotiated terms, the payment should stop.