This article was originally published by a www.houzz.com . Read the Original article here. .
Traditionally, when a homeowner hired a real estate agent to handle the sale of their property, they agreed to pay that agent, as well as their eventual buyer’s agent, a commission. This fee typically amounted to between 5 and 6 percent of the home’s selling price, split more or less evenly between each agent.
Due to a recent lawsuit settlement, sellers may no longer be on the hook for buyer’s agent fees. But if you use a real estate agent, he or she will have to be paid somehow. How does that look for California home sellers? Let’s take a look at Realtor fees in the Golden State.
How much are real estate commissions in California?
In California, the current total real estate commission averages 5.11 percent, according to the latest data from Clever Real Estate. This clocks in lower than the national average of 5.49 percent.
That might be because the California housing market is so expensive: The median price of an existing single-family home in the state was about $908,000, in May 2024, per the California Association of Realtors (CAR). For a home sale of this amount, 5.11 percent equates to $46,400 total, or $23,200 per agent.
Chalk it up to the high cost of living in the Golden State. Here’s what the Realtor fees would be in a few major cities across the state, assuming a home’s median sale price per May CAR data and an even split of a 5.11 percent commission:
City
Median price
Total agent commission
Individual agent commission
SOURCES: California Association of Realtors May 2024; *San Jose median price from Redfin May 2024
Los Angeles
$811,610
$41,473
$20,736
San Francisco
$1,690,000
$86,359
$43,179
San Jose*
$1,500,000
$76,650
$38,325
Fresno
$425,000
$21,717
$10,858
Sacramento
$555,000
$28,360
$14,180
What’s included in a real estate agent’s commission?
Whether they’re representing the buyer or the seller, most agents do a lot to earn their fee.
“For the seller’s agent, the commission generally includes services like listing and marketing the property, hosting open houses, negotiating with buyers and assisting the seller through the closing process,” says Scott Beloian, broker/owner of Westcoe Realtors in Riverside, California. Listing agents also often prepare a comparative market analysis to determine a competitive price and help the seller review and compare offers.
“For the buyer’s agent,” Beloian says, “the commission covers tasks such as finding suitable properties, setting up property viewings, advising on the [bidding] strategy and guiding the buyer through negotiations and closing.”
Who pays agent commissions in California?
Across the country, including in California, it used to be that commissions for both agents in the transaction were paid by the seller. “This arrangement [meant] that, while buyers [did] not directly pay the commission, the cost [was] typically factored into the home’s final sale price, affecting both parties indirectly,” says Beloian.
Again, however, changes to the way Realtor fees are paid are coming this summer. Under the new rules, sellers may — or may not, depending on the details of their deal — be responsible for paying their own agent directly.
Are California real estate agents worth it?
Although no one is required to use a real estate agent to either buy or sell a home, there can be considerable advantages to doing so. Agents are licensed professionals who are experts in their local markets. Their job is literally to help you meet your real estate goal, whether that’s earning top dollar on your sale or finding you the right new home at the right price.
Selling a home without a listing agent — known as a for sale by owner transaction, or FSBO for short — means you take on all the responsibilities typically managed by an agent yourself. With California’s high home prices, a mistake in negotiations or missed detail on the contract can really cost you.
That said, $23,200 apiece in commissions is a lot to tack onto an already pricey transaction. And there can be disadvantages to using an agent, aside from that cost, as well. For example, if the two of you don’t mesh well in your schedule or communication styles, working together can be a rough road. And most agents juggle multiple clients at once, which means you might not always be their top priority. But generally speaking, the pros of having an agent on your side should outweigh the cons.
Saving on commission fees
There are ways to save money on fees if the commission is a hurdle you just can’t get past:
Negotiate the rate: Real estate commissions are often negotiable, and many agents might be willing to lower their rate if you ask. On a high-priced home, even a small rate reduction can make a big difference.
Choose a discount agent: Think about hiring a low-commission real estate agent — companies like Redfin and Clever often charge closer to 1 or 1.5 percent of your home’s sale price, rather than the traditional 2.5 or 3 percent. You might also explore agents who operate on a flat-fee basis, earning a predetermined amount rather than a percentage of the sale price.
Sell by owner: When you sell without a listing agent, you don’t have to pay a listing agent’s commission. But you do have to do all the work yourself, and you still might have to pay your buyer’s agent.
Sell to a cash homebuyer: There are many companies in California that buy houses for cash, closing quickly with no hassle and no Realtors or fees. However, this method will yield a lower sale price compared to a traditional market sale.
Find a trusted California real estate agent
If you’re ready to sell and eager to maximize your profits in the pricey California market, your next step is to find a local real estate agent to team up with. Do your homework first: Start by asking for referrals from family and friends. Look for agents with a thorough knowledge of your specific area and expertise in selling properties similar to yours.
Interview multiple agents and ask targeted questions to help you make an informed choice. The better you click with someone, the smoother your journey is likely to be.
This article was originally published by a www.bankrate.com . Read the Original article here. .
Previously, the buyer’s and seller’s agents would split the commission, but now, the buyer and seller will both be responsible for paying their respective agents.
“What the settlement does is [it] enables both the buyer and the seller to negotiate with the broker upfront of what level of service they want and what their fees are going to be,” said Ted Tozer, a fellow at the Urban Institute, who specializes in housing finance. “I think, in the long run, this is very positive.”
How will the world of real estate change?
Likely, quite a bit.
Because commission rates can’t be set up front, realtors will have to compete for business and may offer lower rates to their clients. But it could also mean bad news for part-time realtors, who have otherwise relied on that 5%–6% commission as an occasional income.
“If you’re a realtor and you only sell a couple houses a month, you’re going to have a tough time making it,” Tozer said. “You will probably have less realtors in numbers, but the ones that are doing business are probably going to be more effective at what they’re doing because they’ll have to make it a full-time job.”
What does all this mean for me, a home buyer or seller?
Firstly, because this is a class-action lawsuit, some home sellers might be entitled to compensation. But it doesn’t include California. It only pertains to metro areas in Arizona, Colorado, Florida, Nevada, North Carolina, Ohio, Texas, Utah, Minnesota, Pennsylvania, Virginia and Washington, D.C.
That said, the proposed settlement will likely empower home buyers and sellers to negotiate the commission rate with their agents.
“What the lawsuit was all about was that the sellers felt like they should have more control,” Tozer said. “I should have the ability to have a say in what I’m paying.”
This article was originally published by a www.kqed.org . Read the Original article here. .
ADU at a Glance
Who lives here: A couple and their three children
Location: Silicon Valley, California
Size: 1,592 square feet (148 square meters); two bedrooms, 1½ bathrooms
Architect-builder: Principal Stephen Shoup and project designer-manager Hideaki Kawato of building Lab
After long delays during the pandemic and its resulting supply chain issues, the ADU was finally completed. Shoup and his team delivered a serene, modern home built for a sense of well-being, with traditional Japanese elements that include smooth lines, airiness and a connection to nature. The design includes an undulating roof with skylights that bring in light and a sense of the outdoors.
“The series of skylights in the main space that denote the main flow offer an abundance of light and a proportionally unexpected architectural and spatial experience,” Shoup says. “On clear nights, one feels as though they can reach up and grab the stars.”
The couple and their children ended up moving in themselves. They especially enjoy the quality of light and the kitchen and bath spaces in the new ADU. The main house is now used as study rooms and play spaces for the children and for relatives when they visit. There’s a large asphalt play area directly outside the ADU. The homeowners park in the relatively long driveway, part of which is covered.
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