How much are typical Realtor commissions In California and why is 2.5% – 3% Agent Commission outdated


What are real estate agent commissions?

Commissions are funds paid from proceeds of your sale or purchase to your Realtor / real estate agent for the service they provide. If you’re a seller, typically you will negotiate an overall commission paid on your sale – usually that amounts to 5-6% of your home’s sale. Your Realtor will split that commission with the buyer’s agent, as an incentive for that agent to bring (you?) the buyer. Each agent typically receives 2.5% to 3% of a home’s sale price.

Commission amounts are customary in each California (and out-of-state) real estate market (e.g. customary real estate agent commissions are likely different in San Bernardino vs. San Francisco). There is no standard Realtor commission – that would be price fixing – a violation of antitrust laws. 

Where do real estate agent commission amounts come from?

Sometime in the last 70 years the 6% Realtor commission evolved to be the norm. What this means is that real estate agents are typically taking a full 6 percent of your sale proceeds for their service. 

This typical 6 percent Realtor commission is across the board – regardless of sale price. What that means is that an agent selling a $2.5mm single family home is taking 6% of your proceeds, for likely doing the same amount of work as the agent selling a $350,000 condo several states away. (hint: California sellers, there’s a better option for you!)

As a buyer, this also means that your work finding the home, going to open houses, doing due diligence – is not being accounted for.

Why is the standard real estate agent commission outdated?

Long gone are the days when Realtors were the only ones with access to MLS real estate listings. To see listings, buyers had to make appointments with their real estate broker / agent for a sit-down meeting where the broker would present a binder with printouts of potential home matches. Buyers would ride along with their agent or meet at any home(s) of interest. Online MLS search portals like Redfin and Zillow changed all of that for the better. 

Now, buyers can easily keep track of homes of interest, find out about open houses, and see what similar homes have sold for in the comfort of their own home. Buyers can also research excellent local and national lenders to help with their financing. Many buyers have largely taken the work out of their agent’s hands!

The new Realtor commission standard: How can I get part of my Realtor's commission back on my home purchase?

As a buyer you’ve done at least some up front work for your agent. It’s inevitable with today’s technology. That’s why Yaypad rebates a full, transparent, easily calculable 50 percent of our commission. We’ll help you: understand the seller’s disclosures; identify potential red flags in your home purchase; find the best mortgage interest rate; negotiate the best possible home buying terms; understand purchase and sale contingencies and their importance to your earnest money; see homes on demand; ensure a smooth close of escrow on your new home, and much much more! 

If your Realtor is not sharing their real estate commission with you… well, that’s so decades ago! 

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