Profile picture for cyclonesurfer

typical commission?

We're looking to sell our house in the next month or so and were wondering whether a 5% commission was appropriate or whether we could get something lower.

We live in a Westside neighborhood with low inventory; all of the houses that have been listed recently have all sold extremely quickly, some above asking price and with multiple offers.

The agents we've talked to have all offered 5%.

  • February 01 2013 - Los Angeles
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Answers (34)

Profile picture for SoCal Engr
#1 - All commissions/fees are supposed to be negotiable, so any REA who responds with a "typical is..." or "usually is..." response is treading on thin legal ice.

#2 - What are the splits being proposed? Not that it's supposed to matter to the REAs, but I'd prefer a split that favored the buy-side REA.

#3 - Try to negotiate a different commission for dual-agency.
  • February 01 2013
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Profile picture for ScottBROKER209
Because commissions are all negotiable this is strictly between you and your real estate agent.  Yes, we are experiencing a 'seller' market right now although its still the agents skill that gets multiple offers competing in order to get a higher price...and furthermore, this is just the beginning.  

A good agent earns every penny when you look back at all the areas of concern the agent went thru to protect the seller from further situations that could arise, such as when it comes to occupancy, inspections, disclosures, financing and appraising the property. (just to name a few)

Understand that the commission you expressed (5%) is typically shared 50/50 with the other agent/brokerage (2.5% each), then the brokerage takes a percentage from each agent (typically 25% - 40%) leaving approx. 1.3% for their time and energy...plus marketing costs to protect the seller.  When it is broken down, it is a lot of risk for the agent.  Just think of it like this...you only pay the commission if the home sells and you get your price. :)

Your job now as the seller is simply to pick the agent that you feel will represent you the best and help you get the 'top dollar' number you are hoping for.

As personality is good, in my opinion you should choose the agent that has the best 'personal' marketing plan for your home.  Even though you see movement in your neighborhood...price and/or market conditions could change in any neighborhood.

Best of luck!

Scott Cary-Broker
  • February 01 2013
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Your list price should determine market value of commission.
  • February 01 2013
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Profile picture for SoCal Engr
"Your list price should determine market value of commission."

What does that mean with-respect-to the OP's question? Are you suggesting that a higher list price should equate to lower commission percentages?
  • February 01 2013
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Profile picture for blue screen exile
According the the 2008 HUD study on FHA financed homes (and they should know, since it is mandatory to fill out a HUD1 form, and the HUD1 form requires providing the agent commissions...):

approximately:
1/5 of homes sold each year that are not in the "jumbo" loan range are sold FSBO, excluding those that paid for a MLS listing and those that paid buyer agent commissions.
1/4 to 1/3 of homes sold each year are sold FSBO when including those that paid for a MLS listing, or those that paid buyer agent commissions.
1/3 of sellers paid combined realty fees of approximately 5.5%
Less than 1/5 of sellers paid combined realty fees of nominally 6% or more.
about 1/5 of sellers paid combined realty fees in the 3.5% to 5% range.

The HUD study states that "Realty fees are well characterized as $970 plus 4.5% of house value".

What you will receive for that will substantially depend on the experience, skill, and dedication of your selected agent, not on how much you pay.  It will also make a substantial difference if the agent is compatible with you or not.
  • February 01 2013
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cyclonesurfer, Simply seeking the lowest total commission split between your agent/brokerage and the buyer's agent/brokerage shouldn't be the defining reason you select an agent. In addition to the qualities of skill, local knowledge, compatibility and strength of marketing plan that have already been provided in other answers, don't you want someone to represent your interests who is reputable and who can be trusted? That is what the best agents bring to the table. This is a major transaction in your life; don't short-change yourselves over a mere percentage point or fraction thereof. Best of luck!
  • February 02 2013
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Profile picture for blue screen exile
"don't short-change yourselves over a mere percentage point or fraction thereof" -

As already posted, there is no correlation between what one pays and the quality of service received.  Don't over-pay just because someone promises something they can't deliver.  The reason there is no correlation is because consumers are gullible and believe too much of the propaganda provided by the National Association of Realtors®

Even in other trades there often is little correlation since those that pay more for marketing their services often charge more and provide less service.  And the advertisement industry still dupes the majority of the American public. After all, who goes to someone they never heard of before? Even if their prices are half what others charge and the services and expertise is twice what others provide?
  • February 02 2013
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Hi Cyclonesurfer,

In the Westside 5% should be the customary commission for homes. I'm with Coldwell Banker, in Brentwood, and our broker is the #1 in the Westside. I'm very familiar with the area and you're spot on with low inventory and houses selling fast, if priced and marketed right. This is where we shine.

I'm sure you've seen some houses sell within a few weeks, and others sit for months. I doubt that any of the houses we market will fit the latter!

Contact me if you need expert advise on marketing your home in the Westside, and what selling price you may get. You'll be surprised!

Like always, talk to at least 3 realtors, before deciding on one.
  • February 02 2013
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Since you are paying the commission, and you have already interviewed several agents for the job.... start by calling back your top three agents and ask them if they are flexible due to the strong demand for quality properies that can be sold in a standard sale-
 I am in Orange County and my last listing in Irvine was priced at $749,900 and we received a full priced offer in 2 days- A year ago the same home would have sold for 10% less and taken 45 days on the market.
Thats why I negotiated a 4.5% commission on this transaction, reducing the listing commission in light of the current market being so favorable to the seller.
  • February 02 2013
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Profile picture for JamieTian
5% commission is the typical rate in the Westside; however, commission is always negotiable with your real estate agent so your best bet would be to contact many agents and talk to them about your wants.

Good luck!

Jamie Tian - Real Estate Agent
Rodeo Realty
  • February 03 2013
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Dear Cyclone,

As you know, commissions are negotiable and as Realtors we are somewhat constrained(legally) about naming the exact figure. I have heard everything from 12% (commercial deals) down to 2% (REO and Foreclosure)
 I can tell you that whatever amount you settle on will be split between your Realtor and the Realtor who brings in the buyer. Additionally, that commission will be split...yet again, with the brokers. I would recommend yo talk to a few neighbors that have sold or purchased recently and see what they have paid. I think that will give you the most honest answer!

Best!
  • February 12 2013
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  • May 29 2013
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I see that "Pasadenan" quoted from my answer so I will clarify and add that regardless of what business one is in, one must know the value one brings to their customers. What message is sent when an agent quickly and regularly discounts their commission as a tactic just to get a listing? And why doesn't the old adage "you get what you pay for" apply to real estate agents when it is applicable to other service-oriented positions? I believe that self-worth is related to self-confidence and that self-confidence is imperative when it comes to negotiations and representing your client at the highest level. While there may be extenuating circumstances that occasionally make it right to offer a slight reduction in commission, doing this regularly as a tool to gain quantity will certainly, at some point, jeopardize an agent's quality of service as they scramble to make up the difference in income.
  • May 30 2013
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Profile picture for blue screen exile
"And why doesn't the old adage "you get what you pay for" apply to real estate agents when it is applicable to other service-oriented positions?" -

It is not applicable to anything nor any position... it is pure marking propaganda and a fallacious statement.  If you pay $185 for a pair of designer jeans, what more did you get for your money than the exact same pair of jeans made by the same people in the same factory that were sold for $8 on clearance?  Only the "designer label"?  Was that label worth $177 to anyone other than the retailer and wholesaler that pocketed the profit?  Or perhaps the assistance of someone to help you with your measurements and the fitting, and a few comments like "that looks very good on you"?  Was that "service" worth $177, or only about $5?

Do normal working people actually have that much extra money to just throw away for no purpose?

What about gasoline?  Sure, I can see someone paying a couple dollars extra to avoid getting out of the car in blaring heat, or pouring rain, especially when wearing 8" heals and a $2500 dress..., but why pay $4.50 per gallon of gasoline for self serve when almost the exact same product is being sold across the street for $3.80 per gallon?

In the U.S., it is not "you get what you pay for", it is "you might get what you negotiate, as long as you do your due diligence".

Everything in the United States is "negotiated".  We don't live in a communist country with price fixing.
  • May 30 2013
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While trying to remain on-topic, I will comment on Pasadenan's reply that the adage "you get what you pay for" has no application when it comes to real estate agents or other service positions. For example, when those who work for gratuities do an exceptionally good job, they typically receive a higher tip and the customer feels that it is money well-spent thereby reinforcing, if you will, the employee's penchant for good service. In response to their analogy regarding the jeans: As a "normal working person", I would save money and purchase the jeans at full price when I needed them as they would never be marked down to $8 first of all and if they were, my size may then not be available. There is no bargain to be had if the product is no longer available and my objective would be to send a message with my hard-earned dollar. Spending more money for goods that are made in USA and not in a sweatshop and that are high quality and not disposable is what I consider an investment in the Country, the business and its American employees. I would feel the same about an agent getting paid fairly even if I wasn't in the business. Paying a fair price to someone providing a quality service sends a message that you agree with and support their professionalism, honesty and ethics; the ripples of such action positively effects the community and the economy down the road. For those who can afford it (not those who are struggling daily to put food on the table and gas in the car), going for the big discount every time has only a 1-time benefit. Thank you for reading my humble opinion.
  • May 31 2013
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Profile picture for blue screen exile
Well, it is clear that you are not tipping the people flipping your hamburgers at Carl's Jr or Burger King or McDonald's enough... you need to start tipping them $300 per burger.  Presently you are "ripping them off", and you are making it almost impossible for them to afford any cost of living.   Remember, you were the one that said that if you paid $307.50 for that it would be "worth it" for you, since YOU would "get what you paid for".

Yes, I understand that you have never bought any foreign product of any kind, and that you don't own an I-phone nor any other Apple products.  Too bad that "discrimination" intentionally violates the U.S. Fair Housing Act.
  • May 31 2013
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Consider the homeowner that negotiates a 4% commission rather than 5% ($5,000 difference on a 500k value) and loses out on the profit of a top agent who can sell it for $530,000. Are you willing to take that chance and lose $25,000 over a 30 day escrow period. Penny wise and pound foolish is the quote that comes to mind.
  • June 02 2013
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Profile picture for blue screen exile
Considering that individual that "calls" themselves a "top agent" (or just does a lot of sales because they spend no time with any clients and prices low to get them sold) is really a "bottom of the barrel" agent because they absolutely refuse to negotiate anything, instead of selling for $530k, they will either talk one into selling for $450k (just like they talked you into paying an outrageous unnecessary commission for absolutely no service), or they will leave it on the market for 18 months loosing money on other costs, and making you do all your own marketing.

I absolutely would NEVER choose representation that advertises themselves as a "top agent" (or top anything else for that matter), under any circumstances.  Such a person would be absolutely impossible for me to work with.  I don't need such arrogant boastful people in my life.

  • June 02 2013
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Commissions are negotiable.  I do recommend you offer the buyer's agent at least 2.5% - Even though agents should show all properties, if you offer them less, they tend to be less inclined to show your property.  In addition, with the lack of inventory the agents are working harder to get their buyer's into a particular home.

As far as what to pay the listing agent, I think it can depend on the service that you are expecting.  Marketing can get expensive, but that may lead to a higher sales price. I think you should sit with the realtor, figure out a game plan you are happy with and decide on the cost.
  • June 06 2013
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Profile picture for Xiao Li Realtor
Nothing is impossible. you can also negociate a total commission fee instead of percentage.
  • July 26 2013
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Profile picture for blue screen exile
"Nothing is impossible" -

Well, that is likely debatable, such as traveling 2 times the speed of light...

But I'm sure Xiao would like to "prove" his statement, by negotiating a "free" commission for anyone that asks that would like to buy and sell a home.  Better yet, he will PAY you a 40% commission for the "privilege" of selling your home.   It is not "impossible' for him, because he needs the "tax write off", and doesn't have enough things to do to occupy his time.
  • July 27 2013
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Since Pasadenan always compares products to services and never offers a professional opinion on anything, this has to be a guy who is willing to make his stockbroker/hegefund manager rich with fees, let his banker rip him off with usury, bank-lobbied regs, and so on but one day figured out what the cash value of a realtor's service and was outraged because "all they do is show the house." What benefits do you get from a realtor?
- Better price - Coordination of certifications
- Ease of transaction - Facitlity of escrow
- Faster sale - More confident title transaction
- Advice on prep of home for sale - Knowledge of the market both micro and macro
- Better negotiation
The time spent on a single transaction can and does stretch out over three to six months. If we were getting paid by the hour, it would be different. But we get paid according to industry ethics and standards
Please spare me your apples and oranges routine. Admit it. You don't know what you're talking about.
Rick
  • August 19 2013
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  • August 22 2013
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A seller's standard commission is typically 5% of the total purchase price.

2.5% usually goes to each agent.

Sellers will typically try to reduce commissions on a purchase price over 2 million to maximize their net profits.
  • September 03 2013
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The question should be, "what will I net after my property closes?".
Which Broker and Company will maximize the results? Interview Brokers and compare the access Brokers give you to qualified consumers. What is the reach of marketing and does the Broker have a marketing plan specifically designed to maximize the consumers perception of your homes value? Ask the broker to show a history of closed transactions and references. Look for local knowledge and International reach.
Commissions are negotiable, and so are services and results.
  • September 03 2013
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Dear Cyclone Surfer,
Regarding commissions, you get what you pay for. While you are aware that you can talk agents into lower commissions, you are also aware that there are different levels of service. While your house may sell quickly, I suppose you meant that therefore the agent has less to do. A really attentive agent will keep his ear to the offers and make you double his commission by using his acumen to increase the bidding. Yes, in a sellers market, there are very rapid bidding wars. On the west side especially because international investors take the long view and bid up and up. Do you really want to take a percentage point or two from a really good agent? Remember the saying, "He who buys by price alone gets what he deserves."
  • September 03 2013
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Cyclonesufer:

Good Evening.

All solid answers, but humble professional opinion, commissions are always negotiable, however,many times sellers focusing on a percentage may be bad move, you want to maximize profits, relieve stress and save time. So, saving a point +/- but not obtaining a well rounded balance isn't a always a win for either side. I rarely discount, unless, perhaps both ends or a sale and a buy, then again, I always cover all bases, thus it works out all the way around.

I hope that helps.

Have a BEAUTIFUL night.

-Shawn I. Rogers, REALTOR, AZ.
  • September 03 2013
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I agree with many, commissions are negotiable, but I have to say the BEST agents DO NOT negotiate their commission because of the budgets they spend to market your property to drive the BEST buyers who pay the MOST $$. 

You should find an agent who TRULY has an excellent track record and speak with him regarding commissions. DO NOT choose an agent because he cut his commission with a blink of an eye. How do you think he/she will negotiate on your behalf?

The best agents do not cut their commission and they are worth every penny. Look into our firm to see what we do different. 
  • June 24 2014
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Profile picture for sunnyview
"The best agents do not cut their commission and they are worth every penny."

The best agents may not cut their commission, but neither do many of the worst agents.  A pair of pants do not define a man any more than a commission defines an agent. There are all types of agents with all types of commissions. 
  • June 24 2014
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Profile picture for zuser20140624185306960
Sometimes you need other agents to bring a buyer. And most agents wont show a home if its not paying the correct fee. So you need 2 discounted agents, a buyers and sellers agent to make the deal work.
Butttt, if an agent cant NEGOTIATE his or hers fee, would you want them Negotiating one of your most expensive assets??? #thumbsdown#
  • June 24 2014
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