I was recently asked the following question in a Facebook private message, but I thought I’d share answer here in a public arena, helping others to gain knowledge as well.
The question: “What’s the going commission rate for Realtors in the Bay Area? …and do I split that equally with the sellers?” (This particular question came from one of my buyers).
My answer: First let me tell you that commissions are almost always paid purely by the seller. A Real Estate Agent’s commission varies from about 3% to 6% in the Bay Area. These are usually split equally between listing agent (seller’s agent) and the buyer’s agent.
For example, on the sale of a $500,000 piece of real estate being sold at a 6% commission rate, the listing agent’s brokerage/office makes $15,000 and the buyer’s office would make the same.
You might ask, if each office makes $15,000 how much does the agent make? Agents are on different splits generally based on how much volume they sell within the current or past year. Commission splits in the Bay Area range from 50-90% with major brokerages. So of that $15,000 an agent will take $7,500-$13,500, as their spilt of the commission. Many agents keep their split secretive from both other agents and their clients. However, if the agent acts as his or her own broker, they get a 100% split in which they would get the full $15,000.
Overall the percentages on commission rates haven’t tightened up too much with all the fluctuation in the market, but it’s good to keep up on these issues, so keep the curiosity coming!