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If you're planning to sell your home in California, one of the biggest costs to consider is the real estate commission. Understanding how these commissions work and who pays them can help you make informed decisions about your home sale. Many California homeowners are now turning to flat-fee MLS services like ListLean to save thousands on traditional real estate commissions. But before exploring that route, let's break down how real estate commissions work and how you can save money.
What is Real Estate Commission?
A real estate commission is the fee paid to real estate agents for their services in facilitating the sale of a property. In California, the commission is typically a percentage of the home's sale price, paid at the close of escrow.
Real estate commissions are usually split between the listing agent (seller's agent) and the buyer's agent. The listing agent markets the property and negotiates offers on behalf of the seller, while the buyer's agent represents the buyer's interests and assists with securing the purchase.
What's the Average Real Estate Commission in California?
In California, the average real estate commission ranges between 5% to 6% of the property's final sale price. This percentage is typically divided between the listing agent and the buyer's agent, with each receiving around 2.5% to 3%.
Example Breakdown
For a home sold at $700,000 with a 5% total commission:
- Listing Agent: 2.5% = $17,500
- Buyer’s Agent: 2.5% = $17,500
Total Commission Paid: $35,000
If the commission is 6%, the total amount paid would jump to $42,000 for the same $700,000 home.
Who Pays Realtor Fees in California?
In most California home sales, the seller pays the real estate commission for both the listing agent and the buyer's agent. This amount is deducted from the proceeds of the sale at closing.
NAR Settlement Update
Recent updates, including the National Association of Realtors (NAR) settlement, have increased transparency to real estate commissions. Sellers are no longer required to offer a specific percentage to the buyer’s agent, which allows sellers to negotiate commissions more effectively or explore alternative selling methods, such as flat-fee MLS services.
How to Save on California Real Estate Commission
Sellers looking to save on commissions have several options:
1. Go the FSBO (For Sale By Owner) Route
Selling FSBO eliminates the listing agent’s commission, but many FSBO sellers struggle to get the exposure and support needed to attract buyers.
2. Use a Flat-Fee MLS Service Like ListLean
ListLean allows home sellers to list their property on the MLS for a flat fee starting at just $95, depending on the package they choose. By listing on the MLS, their property is automatically syndicated to major platforms like Zillow, Redfin, and Trulia, giving them exposure to thousands of potential buyers.
3. Negotiate the Commission Rate
Some sellers negotiate a lower commission rate with their agent. While this may save money, it can also reduce the level of service and marketing provided.
Things Home Sellers Should Know Before Paying Realtor Commission
1. Commissions Are Negotiable
Real estate commissions are not set by law and can be negotiated. Don’t be afraid to discuss a lower rate or explore alternative models.
2. Understand the Services Included by the Real Estate Agent
Before agreeing to pay a commission, ensure you understand exactly what services your agent will provide. Ask about their marketing plan, negotiation strategies, and any additional support they offer throughout the transaction.
3. Consider Offering the Buyer's Agent Commission
Even if you choose to list FSBO or use a flat-fee MLS service, consider offering a competitive commission to the buyer's agent. This can attract more serious buyers and lead to a smoother, faster transaction.
How Home Sellers Can Save Money by Listing with ListLean
Choosing ListLean means paying a flat fee rather than a percentage-based commission. Here’s how it compares:
Example Comparison
Why ListLean is the Smart Choice for California Home Sellers
With ListLean, California homeowners can list their property on the MLS for as low as $95 while enjoying the exposure that comes with listing on major real estate websites. Sellers retain control over their transaction while saving thousands in commissions—a win-win for those looking to maximize their home sale profits.
Ready to save money and take control of your home sale? List with ListLean today!
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