We frequently get asked, what is the average real estate commission in California? Unlike many other sectors, real estate commissions aren’t set in stone. They’re highly negotiable and vary depending on the agent, the brokerage, and the market conditions. Here are the specifics in detail.
What Is The Average Real Estate Commission In California?
On average, real estate commissions in California range from 4.5% to 6% of a home’s sale price.
When the seller pays the (entire) commission, it is divided between the listing agent (representing the seller) and the buyer’s agent. This division is called a “split commission.”
Each agent gets to keep only a portion of the agreed-upon rate, as they also have to share a percentage of the commission with their brokerage.
For example, let’s say you’re working on a 90/10 split commission structure. If a property sells for $900,000 at a 5% commission rate, you will get 2.5%, or $22,500, keeping $20,250 to yourself under the 90/10 agreement while paying $2,250 to the brokerage.
Since commissions directly impact your take-home pay and overall success, it’s essential to understand your split agreement and weigh the potential benefits against the costs.
Other Types of Commission Agreements
While the standard, percentage-based commission model is common, a few other agreements exist. Some agents charge a flat fee regardless of the home’s sale price, as it offers predictability to sellers when dealing with high-value properties.
Then, there’s a tiered model where the commissions increase or decrease based on achieving specific sales benchmarks, encouraging agents to secure the best price for the seller.
Each type can cater to specific goals and preferences. As an agent, you must determine what suits you best.
Why Commission Rates Vary in California
What is the average real estate commission in California? The answer isn’t so straightforward. California’s real estate market is incredibly diverse and competitive. From modest suburban homes to multi-million dollar estates, it has a wide range of properties. The commission rates can be highly variable due to the competitive market landscape, property location, type, and value, negotiation power of the agent, and the rise of discount brokerages.
Enters 100% Commission Structure
The 100% commission model is rapidly gaining popularity in California and around. Agents get to keep 100% of the commission earned on each transaction, paying only a small transaction fee or monthly desk fee to the brokerage. This model has unmatched earning potential and freedom, making costs low and predictable (see the image below to understand the breakup of the expenses).
Agents gain more control over business strategies, marketing budgets, and time to grow their own brand. Without revenue caps or escalating splits, agents can exponentially increase profitability as their business expands.
This model is ideal for agents who want maximum financial freedom, have a strong client base, and are comfortable handling their marketing and administrative tasks. It’s also perfect for entrepreneurial agents who wish to return their retained earnings to their business.
New agents might still benefit from starting with a traditional split model to access training, mentorship, and an established brand presence. However, with the right brokerage, they can also begin with the 100% commission model and supercharge their earning potential.
Ready to Maximize Your Earnings?
Navigating commission rates in California can be tricky. It’s not just a game of numbers but also about aligning your goals and expectations.
So, break free from traditional commission splits. Take control of your future. Boost your earnings with a 100% commission model. Join the NB Elite Realty tribe today and discover how we can empower you to achieve greater financial success.
Unlike traditional firms with hefty cuts, NB Elite Realty allows its agents to keep more of their hard-earned money while paying only a minimal transaction fee. In addition, agents benefit from extensive resources, training, and support from experienced broker-investors, empowering them to grow their businesses without sacrificing income.
The combination of high earnings, low overhead, and robust support makes NB Elite Realty a superior choice for agents looking to maximize productivity, profitability, and success.
Click here to get started.