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When hiring a real estate agent, fees and commissions often come to mind. In California, real estate agent fees can get high, especially in a market where home prices are some of the highest in the country.
After all, California is one of the most expensive states to buy a house in.
The average home in California sells for an average of $538,500. That is roughly 26% higher than the national average of $428,700.
If you’ve ever watched home flipping and selling shows, you probably know that California real estate agents can do very well in the sunshine state!
How much is the California real estate agent commission rate?
In a recent survey by FastExpert.com, we found that the average real estate agent commission in California is 5.14%. This would be for both the buyer’s agent and the listing agent and is generally split between the two 50/50.
It has been generally accepted for many years that real estate agent fees are 6%. Recently, this has been challenged, and more home sellers are negotiating the fees they are willing to pay.
In California, there is a wide range of income levels and many urban, suburban, and rural areas. The real estate agent commission rate can vary, primarily based on the average home price in a specific area.
Real Estate Commission in California
How Much do California Real Estate Agents Make?
The average salary for a California real estate agent can vary widely based on the number of years active, experience, number of sales, etc. According to Ziprecruiter, the overall average for the whole state is around $93,862 annually.
This means California agents rank about 7th in the nation for average real estate agent salaries. California agents who are top earners rank 4th in the nation. Top earners can make up to (but are not limited to) $200,000+ a year.
This number is primarily based on location, as home prices heavily influence it. For example, a San Diego agent can make around $89,475 a year, while an agent in Beverly Hills usually makes $108,279 annually.
California Real Estate Agent Salary by City
As we mentioned, the amount an agent earns can be different by location. The numbers below are consistent across job reporting websites. These are from Ziprecruiter and change somewhat regularly with the market.
- Beverly Hills – $108,279 per year
- Temecula – $104,817 per year
- Corona – $100,240 per year
- Palm Springs – $92,207 per year
- San Diego – $89,475 per year
- Sacramento – $85,526 per year
- Los Angeles – $83,967 per year
- Irvine – $82,284 per year
These are the top 8 highest-earning real estate agent salaries in California. These cities are undoubtedly the most popular in terms of livability and location. A successful real estate agent that lives and primarily works in Beverly Hills and other top cities has the possibility of making a good salary.
Of course, with all the highly paid agents, there are many who fall at the lower end of the scale. In a city like Beverly Hills, many clients are selling homes or are interested in buying homes in the millions of dollars. These clients tend to go with an agent who has handled many sales like theirs, so it can be hard for new agents to get business.
For this reason, most real estate agents starting out will join a team or brokerage. This partners them with agents who have the experience and connections to get a new agent some business and help them get started in their career.
New agents can expect to make far less than the average in their first few years.
The lowest-ranking real estate agent’s salary comes in at $24,970. These are generally new agents, possibly even part-time, in lower-income California cities such as Santa Maria and Anaheim.
How Much is the Real Estate Commission in California?
Alright, so we know that the average real estate agent commission in California is 5.14%, but what exactly does that mean?
The first thing to know when we talk about a commission is what it means. The commission is a percentage of the final sale price of a home that an agent receives as payment for services.
So if a home costs $100,000, and the agent gets 3%, they would get $3,000 in commission.
The second thing to know is that the total commission is usually 5-6% as both the Seller’s agent and the Buyer’s agent need to be paid. They generally split the fee evenly.
What are the Average Broker fees for an Agent in California?
The agent isn’t the only party in this payment system, we also have the broker.
The broker is usually helping the agent get clients and service them well. The offer resources, connections and tangible help to their agents. Because of this, the commission usually goes to the broker who then pays the agent their share. The amount of commission can vary depending on the agent.
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 on that property is $24,000. Unless an agent is representing the buyer and the seller, each agent would get $12,000 of that commission.
When making negotiations a 5% or 6% cut for the realtor may only look like a 1% difference to the seller or buyer. When in reality because of the split between them and the brokerage, it’s actually about a 16% reduction.
$24,000 minus 16.66% is $20,000, or $10,000 each.
If the brokerage is taking 50%, the agent is paid $5,000 total on the $400,000 sale. If they have more experience and only give the brokerage a 30% cut, the agent would receive $7,000 on that sale.
The Bottom Line
Let’s review what we’ve learned, what’s the takeaway?
- The average salary for a California real estate agent is around $93,163 annually
- The highest earners can make over $100k per year
- The California realtor commission typically averages 5.14%
- The total commission is split between the buyer’s agent and the seller’s agent
- That commission is then split between the agent and a broker
How much a real estate agent in California makes is determined by many variables: location, property cost, buyer/seller negotiations, and the split between the agent and the brokerage. The higher the cost of living is in the city they are working in, the more money agents end up with in their pockets at the end of the day.
Ready to Sell a Home in California?
Now that you know about real estate agent commission rates in California, you know what to expect to pay when working with them. Working with a top California real estate agent can be expensive, but trying to list with a discount agent can be risky.
Agents who are in the industry and know it well, also know what it takes to sell for top dollar. A discount agent who is interested in saving you money on commission instead of making you money by giving you 100% could mean a lower bottom line.
Talk to a real estate agent in California or read reviews on FastExpert.com. Interview agents and find the best one for you!