Just to address one common misunderstanding... many agents will say "the seller is paying the commission," which is partially true, as the seller usually agrees to what percentage he or she (or they) will pay from the sales proceeds when signing a listing agreement. But remember that the seller is paying this commission with the buyer's money. Although by the time the seller pays it, the money is of course THEIR (the seller's) money! But it came from the buyer. So who is really paying the commission? (Which came first: the chicken or the egg?) A good way to look at it is that really the buyer and the seller are paying the agent commissions.

Hello thank you for your question. The average commission in Northern California for residential homes is 2.5% of the sales price. The seller is normally the party who is paying the buyers agents commission. If the listing agent also becomes the buyers agent (dual agency) the seller could ask for a lower commission since the listing agent is only going to recieve 2.5% on the selling side but as a dual agent representing both buyer and seller he or she would recieve the whole 5.0%. I personally feel there should be some room to lower the total commisson when I act as a dual agent for my clients everyone wins.

There is no average, regular, standard or normal commission. Commission is negotiable. Each and every agent and agency charges what they see fit, and you, as the consumer, may negotiate that number with them.

Period.

Hi Sharon: Believe it or not, licensed real estate agents can't really talk about commissions in a public environment -- if they do, they could be prosecuted. The reason is all real estate commissions are negotiated, and agents could be accused of price fixing. I don't want to subject myself to government scrutiny or violate any ethics, so I hope you understand why, and why you won't get a straight answer from any agent. Besides, there is really no way to tell. Even if one has computer access to every single MLS system in northern California -- and we ran a report on the selling commission -- it still wouldn't disclose the listing commission.

I can tell a few years ago, the national average commission rate as released by the National Association of Realtors was 5.2% and ranged between 5 and 7%. This is probably still true today. You can find an agent who is willing to list your home for 1% and give away 3% -- others who will do it for 2.5% and give the buyer's agent 3%, some will charge 4% and give the buyer's agent 2.5% -- it's all over the board and depends also on the services you want. Some companies charge more than others. Even though some companies typically charge more, it doesn't mean that you can't negotiate with that individual broker to accept less.

I can also tell you that most of the buyers are represented by a real estate agent. Buyers generally work with a buyer's agent and sellers work with a listing agent. When you list a home for sale, you work out the commission you will pay with the listing agent. The listing agent, in turn, offers to share some of this commission with the buyer's agent. It's not always 50/50. Although buyer's agent are required to show all listings to a buyer and cannot discriminate, some of them will not show those that offer a lower commission.

Also, bear in mind that many buyers today sign buyer's broker agreements with their buyer's agent. This agreement says the buyer pays the commission, which confuses some buyers. But if you read the agreement further, you will find a clause stating that if the seller pays the commission, the buyer doesn't have to pay it.

The honest truth is, though, it is always the buyer who pays the commission because it is part of the sales price. But in our world, we pretty it up and say the seller pays it.

Some buyers like the idea of having the agent earn a set fee or percentage, regardless of what the seller offers to cooperating agents. This can be accomplished through a contract between the buyer agent and the buyer called a buyer broker agreement. A buyer broker agreement (BBA) can be written for a day or a week, or a month, sometimes they are written for longer intervals.

A BBA can be structured on a contingency basis ( so that the agent is paid only after a property is purchased )

Only a few agents and buyers have fully embraced these BBA's yet, The standard is still as Alex described. I only mention the BBA to illuminate that there are alternative choices if a buyer does not like the status quo.

Good morning Sharon,
In the Northern Cali/Sacramento area the average compensation for the sellers agent (listing agent) and the buyers agent is 3% each. Now that's what I typically see. Keep in mind that these commissions are negotiable by law, but also keep this in mind. If you employ an agent to list your home on the market you obviously want the greatest exposure and the highest price for your home. To get the highest price it would be nice to attract several buyers at the same time to bid on your home. This is done through a good marketing plan.... and this costs your listing agent good money.
If you are trying to attract the most amount of buyers it may be helpful to offer a greater commission to the buyers agent. This gives him/her a greater incentive to show your home to his/her buyers. And what most people don't know is... Buyers agents bring in the buyer to homes a majority of the time.
I know, I know... this sounds kind of bad because it is all based on money, but it is true. But in the long run, most sellers wind up netting more even after these commissions because they fetch a higher price for their home.
Next, if you work with a buyers agent, they are traditionally paid by the seller . it costs you nothing to have a buyers agent to represent you in this case, so why not? You have someone that is looking out for only your best interest.
(To be more specific, if the home seller agrees to list their home for 6%, then usually they agree to pay their listing agent 3% and then any buyers agent 3% if they bring in a buyer)

I hope this answers your question and I hope I was able to shine light on this matter for you.
have a great week.

Goodnight.
Alex Amaro