How California Real Estate Agents Earn Big Bucks (2023)

When it comes to hiring a real estate agent in California, one question that often comes to mind is how much they earn. In a state known for its high home prices, it's no wonder...

real estate agent commission rate negotiation in California

When it comes to hiring a real estate agent in California, one question that often comes to mind is how much they earn. In a state known for its high home prices, it's no wonder that real estate agent fees can be quite steep. But just how much do these agents make, and what factors affect their earnings? Let's dive in and find out!

How much is the California real estate agent commission rate?

In a recent survey by FastExpert.com, it was found that the average real estate agent commission in California is 5.14%. This includes both the buyer's agent and the listing agent, with the fee typically split evenly between the two. However, it's important to note that this percentage is not set in stone and can be subject to negotiation. With the rising trend of fee negotiation, more home sellers are now taking control of the fees they are willing to pay.

The commission rate can also vary based on the average home price in a specific area. California, being a diverse state with different income levels and varying urban, suburban, and rural areas, sees this rate fluctuate accordingly.

How Much Do California Real Estate Agents Make?

The salary of a California real estate agent can vary greatly depending on factors such as the number of years in the field, experience, and number of sales. However, the most significant factor that determines their earnings is their location. According to ZipRecruiter, the average annual salary for a California real estate agent is around $103,443.

Of course, these numbers can vary among top earners. California agents rank around 7th in the nation for average real estate agent salaries, and the top earners can make upwards of $200,000 per year. Keep in mind that location plays a crucial role in these figures. For example, an agent in San Diego can expect to earn around $94,270 annually, while an agent in Beverly Hills can make $125,080. It all boils down to the influence of home sale prices in a particular area.

California Real Estate Agent Salary by City

Agents who earn the most tend to work in cities where home prices are the highest. Based on reported earnings across various job reporting websites, here are the highest-earning real estate agent salaries in California:

  1. Beverly Hills - $125,080 per year
  2. Santa Ana - $114,078 per year
  3. Long Beach - $108,548 per year
  4. Bakersfield - $105,153 per year
  5. Torrance - $103,108 per year
  6. Turlock - $102,514 per year
  7. Los Angeles - $101,929 per year
  8. San Diego - $94,270 per year

These cities are undeniably popular in terms of livability and location. Working as a successful real estate agent in these areas can result in a good salary. However, it's worth noting that many agents fall on the lower end of the scale. In cities like Beverly Hills, clients typically deal with multi-million dollar properties and prefer agents with a proven track record. This can make it challenging for new agents to find business.

To kickstart their careers, most new agents join a team or brokerage, pairing up with experienced agents who can provide them with business opportunities and guidance. It's common for new agents to make less than the average in their first few years.

At the lowest end of the spectrum, real estate agents can earn as little as $24,970. These tend to be new or part-time agents in lower-income cities such as Santa Maria and Anaheim.

How Much Does a California Real Estate Agent Earn? (2023)

How Much is the Real Estate Commission in California?

Now, let's delve into what the California real estate commission means for buyers and sellers. The commission refers to a percentage of the final sale price of a home that an agent receives as payment for their services.

In California, the total commission is typically around 5-6%, with both the seller's agent and the buyer's agent needing to be compensated. This fee is generally split evenly between the two parties.

How Much Does a California Real Estate Agent Earn? (2023)

What are the Average Broker Fees for an Agent in California?

When it comes to payments, it's essential to consider brokers' role in this system. Brokers are the intermediaries between agents and clients, providing resources, connections, and support. In most cases, the commission goes to the broker, who then pays the agent their share. The amount of commission can vary depending on the agent.

For newer agents, the commission split with the broker is typically 50/50. However, more experienced agents may negotiate a split of 70/30 or 80/20.

To visualize this, let's assume a property sale worth $400,000. A 6% commission on that sale would amount to $24,000. If an agent represents either the buyer or the seller, they would receive $12,000 of the commission. When negotiating, a seemingly small 1% difference may actually translate to a 16% reduction due to the split between the agent and the broker.

For instance, after a 16.66% reduction, the $24,000 commission becomes $20,000, or $10,000 each for the agents involved. If the brokerage takes 50%, the agent's total payment on the $400,000 sale would be $5,000. However, if the agent has more experience and only gives the brokerage a 30% cut, their payment would increase to $7,000.

How Much Does a California Real Estate Agent Earn? (2023)

The Bottom Line

To summarize, a California real estate agent's earnings depend on various factors, including location, property cost, negotiation skills, and the commission split with the brokerage. Agents working in cities with a higher cost of living tend to take home more money at the end of the day.

Now that you have a better understanding of real estate agent commission rates in California, you know what to expect when working with them. While it may seem expensive to work with a top agent, opting for a discount agent could pose risks. Experienced agents know how to sell for top dollar and have the expertise to navigate the market. To find the best real estate agent for your needs, talk to professionals in California or read reviews on FastExpert.com.

Ready to take the leap and sell your home in California? Explore these articles to help you along the way:

  • 6 Tips on How to Make a Home Offer More Attractive
  • How to Improve Your Credit Score Before Buying a House
  • HomeVestors Reviews: A Comprehensive Analysis
  • 72SOLD Reviews: A Comprehensive Analysis
  • Realtor Reveal: Which Seattle Neighborhood is Right for You?
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