With home sellers paying real estate agents significant fees for their services, many California homeowners are unaware how real estate commissions area set. Are real estate commissions negotiable in California?
In the California Association of REALTORS Residential Listing Agreement (C.A.R. Form RLA), which is a very common contract used in real estate transaction, there is a paragraph that clearly states that commissions are negotiable. In paragraph 3 under the Compensation to Broker heading it states:
“Notice: The amount or rate of real estate commissions is not fixed by law. They are set by each Broker individually and may be negotiable between Seller and Broker (real estate commission include all compensation and fees to Broker).”
California real estate brokers and agents are trained to protect their commissions. Can you blame them? There is a lot of work that goes into lead generation and marketing a home to be sold for the best price. However, that doesn’t mean you should just accept it when they say the “going rate” is 6% or some other amount.
Keep in mind that brokers have a minimum they are willing to take to get the job done and make a profit to put towards their business and personal expenses. So, while you should negotiate, keep in mind that an agent may not be willing to take it and you’ll have to start the process of finding an agent all over again.
If you are unclear on how real estate brokers get paid, see our previous post, “How do REALTORS get paid?” If you are a home buyer in California, you actually don’t pay your real estate agent.
Are real estate commissions negotiable in California? Yes.
So, if you are looking to selling your home, keep this in mind. There is always room to negotiate in real estate. It’s true for home prices, requests for repairs, and real estate commissions.