Home Selling in Sacramento>Question Details

Sharon, Home Buyer in California

What is the average Seller's agent commission in Northern California/Sac area? Who pays the buyer's agent or?

Asked by Sharon, California Sun Mar 9, 2008

rather how is the buyer's agent paid? Thanks for any advice.

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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.
2 votes Thank Flag Link Sun Mar 9, 2008
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
Web Reference: http://www.alexamaro.com
2 votes Thank Flag Link Sun Mar 9, 2008
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.
1 vote Thank Flag Link Sun Mar 9, 2008
Well, mathematically there certainly is an "average". Perhaps what you mean is that the numbers vary so widely that knowing the average is not useful. But I doubt even that is true. I strongly suspect that if someone was selling a $500,000 house and offered the agent $20, the agent would say sorry, no. In between bursts of laughter. Or if an agent demanded $100,000, the seller would say no. Every product and service on the market tends to have a typical, going price determined by supply and demand. Sellers often try to keep the going rate secret so they can get more from uninformed customers. But without the assistance of laws declaring it to be an "ethics violation" to publicize the price -- laws pushed, of course, by trade associations -- that's difficult to do in the long run.
Flag Wed May 7, 2014
Alan May, Real Estate Pro in 60201
MVP'08
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Although this question was asked several years ago, we want to chime in for anyone else that comes across this conversation. Commission is always negotiable, and the Department of Justice even condones it as good competitive behavior among agents.

You can read more about average California commission rates: http://www.upnest.com/1/post/average-california-real-estate-…

Many agents, especially today in 2015 in more expensive areas of California, are willing to be flexible on commission rates, but it's not something they like to advertise. And most clients are not very capable or comfortable with negotiating rates.

If you use UpNest, http://www.upnest.com, we will negotiate commission rates for you with our network of experienced agents. We created our online marketplace where home sellers can confidentially submit their homes, and multiple top local agents will compete to obtain your listing. Some agents lower their commission rates to stand out, and every agent that submits a proposal is an experienced agent, so it's not the same as working with a low grade discount brokerage.

Hope that helps!
0 votes Thank Flag Link Thu Apr 9, 2015
It's really ridiculous, but the rules and regulations surrounding your question are not only wide ranging, but extremely vague. A seller's agent commission can be what ever the seller and the agent negotiate and is negotiable in all cases (i.e. there is no fixed commission).

The seller's agent actually pays the buyers agent (normally), but they pay with part of the money the seller has agreed to pay the seller's agent.

If this might help, the banks that are approving short sales for our office right now are argreeing to cover 5-6% of the sales price for payment to buyer's and seller's agents.

The short answer to your question: Agents can only tell you what they'll charge you for their own services... not what another agent might charge. They also may not come to agreement with other agents/brokers to fix commissions in any way.

Hope this helps!

Cameron
Real Estate Agent (Broker)
Corona, California
0 votes Thank Flag Link Tue Jan 17, 2012
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.
Web Reference: http://www.keyserhomes.com
0 votes Thank Flag Link Mon Mar 10, 2008
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.
0 votes Thank Flag Link Sun Mar 9, 2008
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.
0 votes Thank Flag Link Sun Mar 9, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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