How real estate agent commission works in California

There are usually two real estate agents involved in a home sale:

  • The seller's agent (also called the listing agent), who represents the home seller
  • The buyer's agent, who represents the person buying the home

Both agents earn a percentage of the home's final price when the sale closes. This payment is called real estate agent commission, and it's baked into the sale price when you sell your home.

Based on our research, the average commission split in California has 51.0% of the commission going to the listing agent and 49.0% going to the buyer's agent.

» LEARN: How do real estate commissions work?

Who pays realtor fees in California?

In California, home sellers pay real estate commission fees out of the final sale proceeds for both agents involved in a deal.

However, since this commission is baked into the sales price, you could say that the home buyer is paying — at least in part — through a higher price.

» LEARN: Who pays realtor commission?

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How to Judge the Market

To judge the current market of your area, you will want to take a look at a few defining factors. Those factors are months of inventory, sale to list pricing and home value trends.

If these factors favor the seller, you are in a “seller’s market.” A seller’s market makes it so much easier for you to negotiate a lower commission rate on the sale of your home. If the market conditions favor the buyer, you will likely have a more challenging time negotiating lower commission fees.

How Does the Real Estate Commission Get Split?

However, 6% is split between the seller’s agent and the buyer’s agent. That amount is then shared with the agent’s broker, usually at a ratio of 60/40 in the broker’s favor.

Let’s say an agent successfully sells a home for $1M. The breakdown would look something like this:

  • 6% total commission on the sale ($60,000)
  • split between the listing agent and buyer’s agent 50/50 ($30,000) 
  • 60/40 split between agent and broker ($12,000)

Often, these numbers change with experience, particularly the ratio of the split that an agent shares with their sponsoring broker. Over time, the split may shift in the agent’s favor, or the agent may become a licensed real estate broker themselves and make additional money sponsoring others.

How Commission Gets Split Between Real Estate Agents

The commission is split between the seller’s agent and buyer’s agent right down the middle. Usually, the commission is paid directly to the brokerage, who distributes it to the agent.

How Commission Gets Split with the Broker

The typical commission split between an agent and broker is 60/40 in the agent’s favor. Over time, however,  the brokerage fee may decrease depending on an agent’s productivity and experience. Still, the agent will always pay a brokerage fee, even if it’s just 20% of their half.

Can Real Estate Agents Negotiate a Higher Commission Split?

An agent can negotiate a higher commission split with a brokerage the same way they would ask for a raise in a more traditional job. Performance, experience, productivity, and even better offers from other firms are solid arguments for negotiating a higher commission split.

How to avoid paying Realtor fees

In 2019, just 11 percent of home sales were sold by owners without the help of an agent, according to the National Association of Realtors (NAR). In addition, NAR says, for-sale-by-owner homes (FSBOs) typically sell for less money than homes sold by Realtors. In many instances, FSBO sellers already know the buyers who end up purchasing their homes. Buying without a Realtor is also doable, but the jury is out about whether it’s a wise move — especially in this market.

When you shop around for Realtors, ask them from the outset what their commission is and compare the terms of each person you talk to. If you think the fee is too high, talk to them about lowering it.

“In certain situations where there’s a competitive environment for a prime or trophy listing, Realtors sometimes will negotiate the commission upfront,” Duffy says. “For example, if I’m listing a $4 million home at 6 percent, that’s a lot of money. In a situation like that there is greater flexibility to negotiate the commission — if you get $100,000 or $80,000 instead of $120,000, it’s still a good payday.” If the transaction is being handled on both sides by agents from the same brokerage, you might have more leverage as well.

Realtor Commission in California

In a traditional real estate transaction, there are two real estate agents involved. There is usually a listing agent or a real estate agent representing you, the seller, and one for the homebuyer.

The buyer’s agent represents the person purchasing the home. Once the sale closes, both agents earn a portion of the home’s final sale price after closing.

Because there are two agents involved, they both receive a split of the commission price. The listing agent typically takes about 51%, while the buyer’s agent takes around 49%.

👋 Next Steps: Talk to an expert!

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Highest paying cities for Real Estate Agents in California

  1. Sacramento, CA $99,698 per year 282 salaries reported

  2. Los Angeles, CA $99,462 per year 318 salaries reported

  3. Corona, CA $98,857 per year 37 salaries reported

  1. Long Beach, CA $97,874 per year 85 salaries reported

  2. Santa Ana, CA $97,063 per year 62 salaries reported

  3. Irvine, CA $95,272 per year 115 salaries reported

  1. Huntington Beach, CA $94,564 per year 28 salaries reported

  2. Bakersfield, CA $94,139 per year 71 salaries reported

  3. San Diego, CA $93,103 per year 305 salaries reported

Is this useful?

Methodology

Data on commission rates comes from a survey of over 900 agents conducted by our partner site, Clever Real Estate.

We also used reputable online sources for the following data points:

What is the Average Broker fees for a Realtor in California?

Then we come to the commission price between the agent in question and the broker. The broker receives a percentage of the sale price and pays the agent their share. The amount of commission can vary depending on the agent. This includes agents tied to the broker used in the sale. 

The commission split between a newer agent and a broker tends to be 50/50. 

For more experienced agents, they may receive anywhere between 70/30 or 80/20 in a commission split.

To give you an example of what this can look like, let’s assume the property sale is $400,000. 

A 6% commission of that property is $24,000. 

When making negotiations a 5% or 6% cut for the realtor may only look like 1% difference to the seller or buyer. When in reality because of the split between them and the brokerage, it’s actually a 16 2/3 % reduction.

24,000 minus 16.66% is $20,000. 

That means the real estate agent in this scenario will receive a $20,000 commission while the brokerage would receive $4,000.

Commercial vs. Residential Real Estate Agent Salaries in California 

Commercial real estate and residential real estate are akin to baseball and cricket. Both require a similar skill set, but they’re ultimately different games. Not surprisingly, the respective average salaries of these real estate focuses also varies. 

Real Estate Career 

Average Salary in California 

Commercial Real Estate Agent

$98,825

Residential Real Estate Agent 

$97,243

What is the New York real estate agent salary average?

According to Indeed, the average salary for a real estate agent in New York is $86,353, considerably lower than the figure for California. Keep in mind that this can vary significantly depending on which market you're serving, with luxury agents in New York City earning far more than agents in less affluent areas upstate.

How commissions have changed over the years

Since the early 1990s, Realtor commissions have seen a fairly steady decline. In 2021, the average commission was 5.5 percent — down from more than 6 percent in 1991.

This isn’t to say the total amount Realtors earned decreased, however. In strong selling markets, home prices are high and sellers receive multiple offers. This allows more room for negotiation on the commission, so Realtors may accept a lower commission to earn a higher amount overall.

As the market slows down, Realtor commissions may rise again and become less negotiable. Even so, a seller with a  high-priced listing may still be able to negotiate a lower commission more effectively.

How much should you be earning?

Get an estimated calculation of how much you should be earning and insight into your career options. See more details

How Do Agent Commission Splits Work in California?

How much do California real estate agents take home after each close? There are a few commission splits to consider.

First is the total commission paid by the seller. In California, it ranges anywhere from 1-6% of the sales price. The standard is 5-6%, but for high-priced properties (i.e. $1+ million) the commission may be more like 4-5%. The amount is negotiated between the seller and listing agent before a contract is signed.

Next comes the commission split between the listing and buyer agent. Typically, the commission is split 50/50. Every now and then you may see a listing that offers the buyer agent a higher split in hopes of attracting more leads. The opposite can also be true. The listing agent may take 3.5% to offset the expenses of selling the property and offer just 2.5% to the buyer agent.

Dual agency is another possibility. If the listing agent ends up finding the buyer and representing both then they receive the full commission.

Finally, the commission split between agent and broker. The broker will receive the proceeds from a sale, then pay the agent their cut. The agreed upon commission split can differ from agent to agent even within the same brokerage. New agents may receive a 50/50 split while seasoned agents can get upwards of 70/30 or 80/20.

There are also two other possible commission scenarios. You may pay a monthly broker fee and keep 100% of the commission. The broker may also offer a sliding scale commission split. In this case, the commission starts low around 40/50 or 50/50 and becomes more advantageous the more you sell.

Be aware there could also be additional broker fees per sale, month or year.

Published by

Andrew Te

andrew

Andrew has 7+ years of experience in Real Estate and working with Real Estate Agents. He is passionate about the housing market and solving problems. View all posts by Andrew Te

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