California Real Estate Commission (Your Go-To Guide) 2021

Whether you already are a real estate agent and you’re looking to relocate, or you’re in the process of getting your license, you’ve probably had your eyes set on selling homes in California. After all, California is one of the most expensive states to buy a house in. The average home usually sells for a whopping $400,000! And if you’ve ever sat on the couch and watched HGTV then you already know California real estate agents make bank in the sunshine state!

But how much IS the California real estate commission rate?

In this article I’m going to cover how much you can make as a California real estate agent, how much your commission would be, and how it will be decided.

How Much do California Real Estate Agents Make?

First, let’s cover what a California real estate agent makes annually.

The average salary for a California real estate agent is around $68,860 annually. That’s before extra commissions! This means California agents rank about 6th in the nation for real estate agent salaries, while agents in the top percentile rank in 4th! Top earners can make up to (but not limited to) $123,700 a year!

This number can also be based on your location and isn’t just by being a real estate agent selling homes in California. 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 Realtor Salary by City

1. Beverly Hills – $108,279 per year
2. Temecula – $104,817 per year
3. Corona – $100,240 per year
4. Palm Springs – $92,207 per year
5. San Diego – $89,475 per year
6. Sacramento – $85,526 per year
7. Los Angeles – $83,967 per year
8. 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. As a realtor that lives and primarily works in Beverly Hills, you’ll see quite a hefty paystub after receiving your check. An agent that knows what they’re doing and has a number of successful closed sales in Beverly Hills is working with clients that are A-list actors and musicians. Not a bad spot to be in…

The lowest ranking Realtor salary comes in at a mere $24,970. One could expect numbers like this as a beginner, or in lower income California cities such as Santa Maria and Anaheim.

How Much is the Real Estate Commission in California?

Alright, so how much is the real estate commission in California? The answer isn’t so black and white.

First there’s the commission costs between the agent and the seller. As a real estate agent, you’ll be negotiating the final amount with the seller until you come to an agreement. 

In California the percentage of commission can range 1-6% of the final sale. On average, a U.S. realtor will make 5-6% of the final sale price. However, in California, more expensive properties will pay out a commission of 4-5%. That’s surprisingly, lower than the national average!

What is the average Broker’s fees for a Realtor in California?

Then we come to the commission price between the agent in question and the broker. The broker receives a percentage of the sale price and pays the agent their share. The amount of commission can vary depending on the agent. This includes agents tied to the broker used in the sale. 

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 of that property is $24,000. 

When making negotiations a 5% or 6% cut for the realtor may only look like 1% difference to the seller or buyer. When in reality because of the split between them and the brokerage, it’s actually a 16 2/3 % reduction.

24,000 minus 16.66% is $20,000. 

That means the real estate agent in this scenario will receive a $20,000 commission while the brokerage would receive $4,000.

Conclusion

Let’s review what we’ve learned, what’s the takeaway?

• The average salary for a California real estate agent is around $68,860 annually.
• The highest earners make $108,279.
• The California realtor commission typically sits at 4-6%.
• The commission split between a newer agent and a broker tends to be 50/50. 
• You can split the commission 70/30 or 80/20 in some cases.

The money you can make as a California realtor makes in commission is determined by many variables: location, property cost, buyer/seller negotiations and the split between them and the brokerage. The higher the cost of living is in the city they are working in, the more money California realtors end up with in their pockets at the end of the day.

Something to think about if you’re looking to be a realtor in California or want to better understand how California real estate commissions work! If you’re a buyer or seller looking for an agent in California, look no further than our list of the best California Agents for buyers and sellers!

Source: https://www.fastexpert.com/blog/real-estate-commission-rate-in-california/