How much do real estate agents make in California?

How much do real estate agents make in California?

How Much Do Real Estate Agents Make in California?

Limitless earning potential is one of the real estate industry’s best perks, especially for agents based in California. Some of the nation’s most expensive (and exclusive) properties are purchased and sold in California, but even “average” properties command healthy commissions. As a result, the average salary for a real estate pro in the Golden State hovers around $97,243 per year (the national average is $94,721). Of course, many factors determine how much income a real estate agent in California can generate, including but not limited to: 

  • Their years of experience
  • The real estate market/city in which they work 
  • Their niche/specialty 
  • The scope and size of their network
  • How much they invest in marketing 
  • Their brokerage firm
  • Their status as an agent (full-time or part-time) 

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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.

Best-paid skills and qualifications for Real Estate Agents

Most recommended skillMarket Analysisearn +61.67% more The jobs requiring this skill have increase by 1400.00% since 2018. Real Estate Agents with this skill earn +61.67% more than the average base salary, which is $113,045 per year.2017201820192020Job Trend Job TrendYearNumber of job openings on Indeed requiring this skillChange from previous year20172increase by 220181decrease by 50.00%201915increase by 1400.00%

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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.

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.

Methodology

Our data on commission rates is based on a survey of 915 of our partner agents, in which we asked for typical rates for both buyer's and seller's agents in their area.

Additionally, we utilized the following data from Zillow and Realtor.com:

  • Home values, list prices, and sale prices: Based on Zillow data as of March 2022
  • Sale prices and sale-to-list ratios: Based on Redfin data as of December 2021 (unless specified otherwise)
  • Months of inventory: Based on Realtor.com data as of January 2022

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.

Who pays realtor commission in California?

In California, the home seller typically pays the realtor fees for all agents involved in the sale. This is the standard nationwide.

» MORE: Who pays realtor fees?

Realtor fees are baked into the price of the home and gets paid out of the proceeds when it sells. So home sellers don’t have to pay real estate commission up front; the agents get their cut when the deal closes. Here’s how that breaks down for a typical sale in California:

CategoryAmountPercentage
Sale price$684,000NA
Realtor fees$33,6004.92%
Seller closing costs$6,800-20,5001-3%
Mortgage payoff$58,0608%
Seller net$571,800-585,50084-86%

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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.

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Minimizing Realtor Commission in California

Traditional home buying works for some people and can be a stressful and strenuous situation for others. Realtor commission in California is a relatively expensive fee that you will have to take care of if you decide to sell your home the traditional way.

If you are looking for more information on how much your home is worth, submit your address now. Our quotes come with a zero obligation guarantee and are free for you to use.

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