How much are real estate commissions in San Diego?

Real estate commissions in San Diego are negotiable.

It is usually the home seller who pays all real estate commissions in San Diego.

How much you pay in real estate commissions depends on your written negotiated agreement with your real estate agent.

The commission rate also often reflects the level of service, confidence, expertise and skill of the agent that you hire to sell your home.

Q & A on San Diego Real Estate Commissions

What is the average real estate commissions in San Diego?

Real estate commissions percentages vary in San Diego and are negotiable by law.

However, to give you a rough idea, we’ve seen commission rates to sell a house in San Diego anywhere from 1% to 3% of the final sales price of the home in addition to the buyer’s real estate agent commission.

The total selling real estate commissions for both sides including the buyer’s agent commission we have seen are anywhere from 4% to 6% total of the negotiated sales price and are custom split between the seller’s real estate broker/agent and the buyer’s real estate broker/agent.

Here at DreamWellHomes.com, the average San Diego County real estate commissions from recent home sales transactions we have referred to other real estate agents in our network is a total of 5% of the home selling price and typically split fifty-fifty.

In this 5% example, the seller’s broker and real estate agent gets 2.5% and the buyer’s real estate broker and real estate agent gets 2.5% of the final home sale price.

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How to Save on Real Estate Commissions in San Diego?

If you want to hire a full-service real estate agent, you may want to interview at least three agents to find out what the average real estate commissions are in your area and compare the real estate and marketing services that are included to help you find the right buyer(s) for your home.

How to save on real estate commissions from full-service real estate agents?

Sometimes all you have to do is ask!

And when you do ask, the way the agent responds could be a good or bad indicator of how skilled he or she is in negotiating dollars for your home.

Many buyers and the real estate agents who work for these savvy buyers are cut throat negotiators especially after completing a home inspection on your home, so be sure to hire a tough agent-negotiator to represent you.

Now, if you are in a situation where you have little equity in your home and know that you need the help of a full service real estate professional, it does not hurt to ask and explain your situation.

There are cheaper real estate commissions available through the following services:

Discount Real Estate Brokerages

Discount real estate brokerages charge real estate commissions that can be lower. With the sale generating less income for the broker and the real estate agent, you just need to do your own research on whether they have the time and business resources to spend as much money marketing your home.

Also with a discount brokerage, you need to set up the right expectations on how robust their services are as far as:

  • Professional photography
  • Professional fliers
  • Virtual tours
  • Video marketing
  • Dedicated property website
  • Premier listings on web pages like Zillow, Trulia, Realtor.com, etc . . .
  • Inclusion on the local Realtor® Caravans, etc.
  • Open Houses
  • Seller consultations and updates
  • MLS updates
  • Market condition updates

Be sure to ask about these items are if they important to you as tools to successfully find a buyer for your home. In this situation you may be dealing with a single agent doing all of the work themselves.

Flat Fee Commissions

Some real estate brokerages also offer a low flat fee commission, in addition to fees for a-la-carte real estate services to meet your specific home selling needs. Be sure to carefully explain all of the services that you want, and then review the associated fees to compare with the cost of a full service real estate brokerage.

MLS Listing Only

Finally, you may choose to find a broker who, for a flat fee, will simply place your home on the MLS. You pay these brokers up front regardless of whether your home sells or not. In this situation, be prepared to:

  • Handle all of the communications (phone calls, emails, text messages) from interested buyers and real estate service providers
  • Schedule all property showings
  • Do your own negotiating
  • Do your own marketing to find more potential buyers
  • Possibly compile and complete all of the required paperwork
  • Possibly pay a buyer’s agent commission yourself

This is basically For Sale By Owner, except that you have the bonus of having your home exposed to real estate agents and buyers on the MLS.

For Sale By Owner (FSBO)

You also have the option of For Sale By Owner (FSBO) to find a buyer without involving a real estate agent to avoid real estate agent commissions.

Be aware that sixty-seven percent of sellers who were successful in selling their own homes said that they would not consider doing it again. The reasons cited for this are:

  • Difficulty in arriving at the correct price
  • Lack of marketing know how
  • Legal concerns
  • Lack of negotiation skills or the temperament to be effective
  • Tight time constraints
  • Possibly pay a buyer’s agent commission yourself

Even though these folks were successful in selling their homes and they saved on paying real estate commissions, the majority of them will choose to “leave it to the experts” next time.

Many home sellers greatly underestimate the levels of stress that selling a home brings. Selling a home quickly and for top dollar requires expertise and time that not every homeowner has available. Add to this the massive amount of paperwork necessary to protect yourself from future lawsuits from the buyer, and you might begin to understand why the majority of FSBO’s will hire a Realtor® the next time they need to sell.

If you wish to save on real estate commissions, explain to your real estate agent that you have the time and effort to spend helping to sell your home at a reduced commission rate.

Here are typical upfront marketing costs that are incurred in marketing a home:

  • For sale signs
  • Open house signs
  • Sales fliers
  • Direct mail flyer costs
  • Postage costs
  • Professional photography fees
  • Videographer fees
  • Virtual tours
  • Premier listing website costs
  • Dedicated property web page costs
  • And most importantly, hours of people’s lives

The key is not to skimp on items that will make your home more attractive to home buyers both in person or online.

Home Selling Tip: Do not allow anyone (including the agent) to take photos of your home for publication if they do not have photography skills or professional camera equipment. The photos of your home are your “24/7 Open House” and are critical in making good first impressions to potential buyers online.

You should always make yourself available to prep your home before all scheduled showings to make it as show ready as possible. You may also do your own home staging rather than paying for a professional home stager

How much do San Diego real estate agents get paid by their real estate brokers?

The commissions that real estate agents receive from their respective brokers depend on their previously agreed upon contractual split. It is common for lesser experienced or part-time real estate agents to receive 50% to 65% of the real estate commissions paid to their broker’s side of the transaction. In the example above, when a listing broker receives $12,000 in a 50/50 split, the listing agent receives $6,000.

More established real estate agents receive anywhere from 65-95% of real estate commissions paid to their broker. Some real estate agents can receive 100% of the commission from their broker’s side of the transaction. But they then pay transaction and other fees to their broker after the sale closes.

Always remember that Real Estate Commissions in California are negotiable.

So, if you need to sell your San Diego home, interview at least 3 brokers/realtors in your area and hire the one who you have the most confidence in that they will get the home sold at the price and within the timeframe that you need.

The best and most experienced agents typically earn more than enough business from referrals, past reactivated clients, and from their outstanding professional reputation, that they may not agree to discount their fees.

On the other side of the coin, there are many agents hungry for business. These agents are the most likely candidates if you want a discounted real estate commission. The question is – which agent is more likely to sell you home for what you need in the timeframe you desire?

In recent studies, most homes fail to sell because of pricing, its condition, etc. not because of real estate commissions. So, real estate commissions are not the deal killer.

Focus instead on how you can best prepare and market your home to get top dollar from the successful sale. If you will be working with a real estate broker, be sure to have the correct pricing strategy. Also, prepare fully and make your home available to potential buyers to see. Remember – “a home that is easy to show, is easy to sell”.

Are These Commission Savings Real?

Assuming your house successfully sells, the real question is: what is the ultimate effect on saving on real estate commissions?

  • If it takes longer to sell your home and less money comes into your pocket as a result of hiring a real estate agent based on how much commission they charged, was it really worth the extra stress?
  • After a final accounting, did you really affect any savings by going the discount route?
  • A few thousand dollars saved on the commission side of the transaction, could quickly be overwhelmed by:
  1. A lower sales price
  2. A weaker negotiating position
  3. Higher holding costs  (mortgage, HELOC payments, insurance, property taxes, Mell-Roos taxes, HOA fees, utilities, etc.)
  4. A longer time on market

In San Diego County, the Realtors typically charging the highest commissions should be providing:

The broadest marketing exposure and expertise

  • The most skilled negotiator
  • The best in customer care
  • A high level of legal compliance knowledge

This will be the most “hands-off” seller experience that can be obtained. Most often you will be dealing with an agent who has a support staff behind them performing many of the non-sales critical tasks – leaving your Realtor®/ real estate agent free to do what you hired them to do – sell your home quickly and for the most money.

San Diego Real Estate Commissions Splits

The majority of real estate commissions are paid directly from the proceeds from the sale at close of escrow. The real estate commissions are split between the real estate broker representing the seller (listing broker) and the broker representing the buyer (selling broker or buyer’s broker).  These respective brokers will then pay out a portion of their proceeds to the real estate agents who sold the property.

For example, in a 6% real estate commission scenario, a typical real estate commission split would be: 3% will go to the seller’s broker and 3% will go to the buyer’s broker.

To illustrate:

Purchase Price: $400,000 at  6%

Total Real Estate Commissions: $24,000

If there are two brokers involved who agree to split the commissions evenly: The listing broker representing the seller receives $12,000 while the selling broker representing the buyer receives $12,000.

These brokers then take their respective $12,000 and pay the real estate agent who sold the home their agreed upon commission split. If it is a 50/50 split, the agent gets $6,000.

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