Understanding how real estate commissions work in California is crucial for both buyers and sellers. This guide will provide an overview of real estate commissions in California, including the average commission rate, how commissions are split, and recent changes to commission rules.

1. Average Real Estate Commission in California

The average real estate commission in California is 5.11%, which is less than the national average of 5.49%. This commission is typically split between the buyer's agent and the seller's agent.

2. How Real Estate Commissions Are Split

Real estate agents are paid on commission, which is a small percentage of the earnings made from selling a home. The commission is usually split between the agent and their broker. Typical commission splits include 50/50, where the broker and real estate agent receive equal sums of money from a commission split.

3. Recent Changes to Commission Rules

New rules governing real estate agent commissions went into effect on August 17, 2024. These changes bring the buyer and seller into negotiations over commissions on the sale of a home, allowing them to negotiate who pays it and how much is paid. Additionally, listings can no longer specify how much buyers' agents are paid, removing the assumption that sellers are responsible for paying both agents.

4. Impact on Buyers and Sellers

These changes are expected to reduce costs for buyers and sellers in the long run. By allowing negotiations over commissions, buyers and sellers can potentially save money on real estate agent fees.

Conclusion

Understanding how California real estate commissions work is essential for navigating the real estate market effectively. By knowing the average commission rate, how commissions are split, and recent changes to commission rules, you can make informed decisions and potentially save money on real estate agent fees. For more information on real estate commissions in California, visit the California Department of Real Estate. By staying informed about California real estate commissions, you can ensure a smoother and more cost-effective real estate transaction.

Frequently Asked Questions

• Q: What is the average real estate commission in California?

• A: The average real estate commission in California is 5.11%.

• Q: How are real estate commissions split?

• A: Real estate commissions are typically split between the agent and their broker, with common splits being 50/50. 

• Q: What are the recent changes to commission rules in California?

• A: New rules allow buyers and sellers to negotiate commissions, and listings can no longer specify how much buyers' agents are paid.