If you are looking to sell your home with a realtor, they earn a commission once the home is sold.
Selling your home for the first time is scary. You see the expenses and think how can you do this?
San Diego real estate commission seems high, yet it’s the same around the country.
There’s a reason realtors charge commission. They get the job done.
They sell your house for more than you could get on your own and they market it beyond any homeowner’s capabilities.
It sounds crazy to pay to sell your home, but it’s a service and one you’ll want to pay for.
Even though you thought you were done paying closing costs when you bought your home, there are fees sellers pay to transfer their home to someone else.
Since it’s such a large investment, it’s important that you have the right people by your side, which includes a great real estate agent.
In this article, we’ll discuss how much the real estate commission is, who pays it, and how.
How Much is San Diego Real Estate Commission?
Let’s get the worst news out of the way.
It will cost you 6% for real estate commissions. If you sell your home for $400,000, that means $24,000.
It sounds like a lot, but if you sold on your own, you probably wouldn’t get close to the $400,000 you wanted for the home.
According to NAR, the average for-sale-by-owner home sold for $200,000 (nationwide) in 2018 and the average home sold by a real estate agent sold for $280,000. The difference more than makes up for the commission.
If you want that full $400,000 for your home – you want to pay the top real estate agent and that means 6% commission in most cases.
Who Pays San Diego Real Estate Commission?
The seller pays the real estate commission. But there’s good news.
You work it into the sales price. So even though 6% sounds unaffordable – it’s not coming out of your pocket. If you get $400,000 for your home, $24,000 comes off the top. You never had the money in your pocket, so it’s not like you are paying it – it’s just coming off your profits.
You won’t ever see it, cut a check for it, or otherwise be responsible for it.
The money comes right out of the sales proceeds and gets paid directly to the real estate broker.
Some say the buyer pays the real estate commission and it may seem true.
It depends on how you look at it. Yes, the buyer pays the home’s sales price, but ultimately, the commission comes out of the seller’s profits. The buyer pays it in the sales price.
How do Buyer’s Agents get Paid?
Listing agents don’t keep the entire commission.
They split the full commission with the buyer’s agent.
Each agent has a different agreement, but most split it 50/50 unless otherwise agreed.
In other words, the buyer’s agent gets 3% of the sale, as does the seller’s agent.
Our $24,000 example is now $12,000 in the seller’s pocket – but the entire amount doesn’t stay with the seller.
Selling (or listing) agents have expenses they pay out of the commission including:
- The agent likely works for a broker – Each broker has a different payment arrangement, but the commissions range from 10% – 50% of the agent’s commission
- Real estate membership fees – Agents may belong to the NAR, MLS, and other associations requiring a fee
- Marketing fees – All marketing costs come out of the listing agent’s pocket. This can include flyers, mailers, photography, videography, ads.
- Employee costs – If the agent has an assistant, the cost of this employee comes out of the commission.
Real estate agents cover numerous fees that you never even know about unless you ask. It’s their job to market and sell your home, and that costs money.
What Else do Listing Agents Do?
There’s a lot of work that goes on behind the scenes. Even though it seems like you only spend a few hours face-to-face (or Zoom-to-Zoom today) with an agent, they do A LOT behind the scenes.
Before they meet with you, they’ll do a comparative market analysis. They need to know how much your home is worth based on the values in the area so they know about how much you can ask for the home.
For example, if homes in the area are selling for $500,000, but you wanted to sell for $700,000, the agent would know that’s out of the ballpark and can show you why.
They do this work before you agree to work with them.
Once you sign with an agent, the real work begins. Agents get to work marketing your home. They’ll do some or all of the following:
- List the property in the MLS
- Network with other buyer’s agents in the area
- Network on social media
- Create and run open houses
- Schedule the photography and videography for marketing materials
- Follow up with buyer’s agents who viewed the home
- Negotiate potential offers
- Handle the paperwork
- Advise you on how to change/fix the home to get the most for it
If you are considering selling a home or have any questions, please feel free to contact us at 858-755-6357 or firstname.lastname@example.org