It’s no secret that the property value in California is high and the marketing is competitive. As of 2021, the average cost of a home in California is $722,406. As you start your research into properties, cities, and everything in between, you may be wondering: how much does a real estate agent cost?
We’re here to break down the costs of a real estate agent in California, as well as give you insight into how the charges work.
Who Pays Realtor Fees?
As you start your home buying journey in California, you may believe that not hiring a real estate agent will help you save money in the long run.
However, this isn’t necessarily true.
The truth is, the costs are typically taken from the home proceeds. Commissions are commonly outlined in the agreement when the buyer agent comes to a deal with the selling agent.
However, in some circumstances when the market is competitive, these fees can be paid by the buyer as part of the negotiation. A seller can also choose to negotiate the realtor fees when finalizing a sale.
In California, where the market is considered competitive, offering to pay these fees can help give you the competitive edge against the rest of your competition.
When you hire a real estate agent to represent you as a buyer, they’re offering their expertise and professionalism, free to you! That’s because their commission comes from the sale of the home as well.
Being a real estate agent is all about connections. When they show you a house that you may be interested in purchasing, they are working on the commission charge details with the seller’s agent as well.
If you’re a buyer, hiring a real estate agent is crucial to ensure you are being professionally represented in the competitive market.
Why Home Sellers Should Work with Real Estate Agents
Since the cost of the commission charges come from the sale of your home, you may be wondering if selling your home yourself will help you save money.
The answer is yes and no.
For one, FSBO comes with several additional costs. From professional photography, listings, and signage, you will need to pay a large sum of out-of-pocket charges that would usually be covered by the real estate agent representing you.
You’ll also need to prepare your home for the sale. From staging to repairs, there are a lot of miscellaneous tasks that go into prepping your house. A real estate agent has the professional experience of helping others with their homes.
If you accidentally miss a repair or forget a permit, it could hinder your ability to sell your home in a timely manner.
Many FSBO sellers also struggle with pricing their homes in the competitive market of California. You may reference other homes in your area and have a ballpark idea of what your home may be worth.
But without a professional opinion on some of the granular details about your property value, you may be over or underselling your home! Which can put you at a disadvantage.
Home Selling Logistics
The logistics of selling a home can also start to get complicated if you don’t know what you’re doing. There is a lot of negotiating, contracts, and real estate terminology that you’ll want to have a good understanding of.
Lastly, even if you choose to not work with a real estate agent to sell your home, you may still find yourself paying a commission cost to your buyer’s real estate agent.
At the end of the day, you may lose out on the valuable, professional experience to say less than 1-3%.
Commission Charges in California
The standard commission cost in California can be anywhere between 1-6%. The commission is determined by the agent, seller agreement, and the overall value of the home. If the home value is a higher value property, the commission is usually between 4-5%.
However, your buyer’s agent won’t see that full percentage. 3% of the commission cost will go to the buyer’s agent and the buyer’s broker will receive 50% of that 3%. The same applies to the seller’s agent and the seller’s broker.
Let’s say the 6% commission paid to the agents by the seller is $50,000. The buyer’s agent would receive $12,500 and the buyer’s broker would also receive $12,500. The same goes for the seller’s side.
In some scenarios, the split can vary based on the real estate agent’s experience. These commission splits can fluctuate but, 70/30 or 80/20 are also common in California.
In some situations, an agent will represent the buyer and the seller. If this is the case, this is what we call a dual agency. For a dual agency scenario, the agent would receive the full commission and split the percentage with their broker.
Why You Need a Real Estate Agent?
It’s no secret that the real estate market in California is competitive and the home buying process can be a stressful experience. Thankfully, a real estate agent can help you get the home of your dreams for a price you can afford.
So, how much does a real estate agent cost? That depends on how you look at the house hunting experience.
The cost of a real estate agent in the grand scheme of things is relatively low for the expertise and experience they provide. In fact, you may even find yourself saving money when utilizing a real estate agent!
The benefits of having a real estate agent far outweigh the costs associated with hiring one. From paperwork to negotiations, you will never regret how valuable a real estate agent is.
California has one of the largest selections of agents available for your home search! With more than 193,171 active realtors who are ready to assist you every step of the way.
The Bottom Line
At FastExpert, we make it easy to find a real estate agent perfect for you. If you’re a buyer or a seller, you can use FastExpert to search, compare, and hire a top-rated real estate agent that is right for you.
As you start your house hunting, don’t get discouraged by the competitiveness of the California market! There is a home for you out there and a real estate agent who wants to help you find that home.
We’re here to help make the process easy and provide you with the resources needed to find a real estate agent in California that is a good fit for your individual needs.
If you’re gearing up to sell your home or are looking to start shopping soon, we recommend starting your search today.
Happy House Hunting!