Profile picture for SoCal Engr

What are typical commissions for sellers in SoCal? LIst <$500K? List >$500K?

For the seller, what are typical commission rates in SoCal? Are these rates at all dependent on the list price?
  • August 14 2012 - Fallston
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Answers (14)

Profile picture for blue screen exile
I was wondering what HUD meant by "well characterized" in their "study"...

At first glance, it appeared they didn't define it.  There was no glossary of terms, or anything similar.   They used the term "characterized" multiple times throughout the document, but they only used the qualifier "well" once with the term "characterized".

But there is a reference to model #1 in Table 17 in Appendix I.

And that indicates a Coefficient of Determination (R^2) value of 55.8% for the model.  Perhaps they consider anything with a Coefficient of Determination over 50% "well characterized"?  I still would like to see the percent standard deviation.

It is interesting that for model #1 they improved the Coefficient of Determination to 58.0%, by including factors for differences in Agent Compensation between States.  Using that model, it indicates California Realtor fees are an average of $641 higher than the average for the nation.  That would mean we should adjust the "average" fee equation for California to $1611 + 4.51% of sold price.  R^2 is still only 58%, so to me, it is still not a good prediction of what any agent would charge in the area for any given price range home.
  • August 15 2012
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Regardless of the list price, commissions to the seller are negotiable. It's entirely a discussion between the seller and the agent. The real issue is the quality of the service that you receive. To that end, research the agent's history and attempt to collect recommendations. After interviewing several agents, you'll find one with whom you have the best rapport. That's the time to consider what the value of that service is worth to you. 
  • August 15 2012
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Profile picture for blue screen exile
Well, I still can't find a study specific to Southern California, but here is a national study HUD did for FHA financed homes in 2008:

A Study of Closing Costs for FHA Mortgages  (May 2008).

The relevant info seems to be page 122 & 123:

pg 122:
"Real estate agent fees are not uniform at six percent of house value.Instead,realty fees are well characterized as $970 plus 4.5 percent of the house value,with substantial variation around this average..."

pg 123:
"The average fee is 4.5 percent,the median fee is 5.5 percent,and the maximum is 16.9 percent."

I don't know if they gave the percent standard deviation for their curve-fit or not, as I didn't look for it.

Unfortunately, they didn't break down that fee for listing agent commission, and "co-op" commission listed for the selling agent.  And in the lower price ranges, I'm aware of numerous selling agents that charge a flat fee to their client on top of the listed "co-op" commission percentage.  And some "buyers agents" make their clients sign a "exclusive buyers agent agreement", indicating a minimum fee and minimum percentage if the client buys a FSBO or other listed home that has "insufficient" commission.

And since FHA is not used for Jumbo loans, it appears this curve-fit fee structure would not apply to the multi-million dollar homes anyway.

Another interesting fee structure that was published on this Forum ( Buyer Rebates Revisited again ) is that offered by Redfin, but this was indicating the "selling" side commission, not "listing" side.  Anyway, it seems to indicate $4k + (2/3% to 1%)*(house value - $400k)

I've seen some agents posting on this website that for multi-million dollar homes they will take the listing for a 2% commission.  I don't remember if that was only for the listing or if it was both sides, but in any case, I can't find the threads now, and don't want to take the time for the search.

And we've seen several FSBO websites where a "listing commission" could be a flat fee of about $500 to $600, but that only includes a listing in the MLS for about 6 months, a Sepra Lock box, and forwarding of phone messages.  Typically, these FSBO tend to be listing 2% to 3% "selling agent" co-op commissions in their Multiple listing.

Obviously, the local Realtor association could publish a survey or study on the issue, but they don't as they want to convince their members that doing such would be a violation of U.S. anti-trust laws.

Obviously, since the Realtor surveys tend to be about 500 randomly selected agents, any other entity could publish a survey too.  Perhaps it would be something a local University Economics department would be interested in doing?
  • August 15 2012
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I was kind of wondering what the point of this thread was, too.....
hmmmmmm
  • August 14 2012
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Profile picture for blub blub blub
Not sure what the point would be, so let me ask.  SoCal...what is the point of this question?

You have been on enough of these threads to know that agents should not be giving you a definitive answer to this question. 

Agents should know that they should not be answering this question with  set rates or percentages.  The commission conversation is a conversation between potential home sellers and the agent, as commissions are NOT typical, normal or standard, and should not be a conversation between agents in a public forum.
 
  • August 14 2012
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Profile picture for Dunes ..



blub you may be right but I would much rather think we disagree over you can or can't than think SoCal posted a "trap question"

What would be the point?.....besides me now tearing up my list of ill-gotten names lol

  • August 14 2012
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Profile picture for blub blub blub
Dunes I think that this may very well be a trap question to see how many agents will answer with "the standard..." or "the normal..." as SoCal knows very well that this is a question that agents can not answer.  SoCal has been in enough conversations regarding this question to know better.
  • August 14 2012
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Profile picture for Dunes ..
apologies..I left out

Thatsa my opinion! ;)
  • August 14 2012
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Profile picture for Dunes ..
Cool..ask for responses from Agents that the DOJ says they can't give

You can ask what they as an individual or Agency) charge ...they can say what they charge (I charge X)
and you can figure out what you think is typical

But for an Agent to say.."Typical".."Standard" "Usual" as if responding for the Profession
NO No No and No
You..the DOJ..the paper...France saying the "typical"  based on their observations is not the same as Agents (Members of the profession charging those commissions) saying typical..usual..standard

You..the DOJ are very unlikely to be going to try and Price fix Commissions but Agents..different ballgame entirely

Right or wrong that's how it is and if unhappy with that take it up with the DOJ......

Fair warning for those agents who do give a typical %
I's truly taking names putting them on a list and sending them here
DOJ...Report Violations and I'll let them decide what is OK and what ain't

Anyway...Agents please step right on up and state the typical/standard/usual commission ;)
  • August 14 2012
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Commissions like any other adpect are ntgotiable, if the realtor cannot negotiate a good commission or the services then the realtor probably wont be abe to negotiate for you that much either!
  • August 14 2012
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There is no definitive answer. I doubt you will get a quantifiable response from any Realtor in California. It is negotiable. You will have to discuss the services that are offered, you will have to see how comfortable and how confident you are working with a Realtor, then you will make a determination on whether the commission quoted is well worth it.
  • August 14 2012
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Profile picture for CCarron
Be sure to ask what services the broker will provide. Some "discount" brokers do not advertise in newspapers, do not take quality photos of your home for the multiple listing, are not "premier agents" on Zillow so their listings do not have the higher priority, do not pay to have a yard sign installed, do not have a brochure rack on the yard sign with color brochures in it, do not hold open houses, do not negotiate the sales contract (or renegotiate after home inspection or appraisal), do not attend the final walk-through inspection, do not attend the closing/settlement with you, etc., etc.  Also be sure to specify how much of the total commission that you pay will be shared with the selling (buyer's) agent.  For example, Broker #1 quotes you 6% with half of that (3%) going to the selling agent, and Broker #2 quotes you 5% with only 2% going to the selling agent, then Broker #2 isn't offering you a discount at all -- s/he is getting the same 3% as Broker #1, while shortchanging the selling agent which may discourage some not-too-ethical selling agents from showing your home.
  • August 14 2012
  • 0Yes

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Can't speak for SoCal but average commission rates in Chicago are 5-6% of purchase price.  
  • August 14 2012
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All commissions are negotiable and therefor you need to contact real estate offices to ask what they charge.
  • August 14 2012
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