Have you ever wondered how a real estate agent gets paid? San Diego realtor Jeremy McHone breaks down how real estate agents get paid. Explaining what is a commission, common percentages, and what you get when working with a premium agent.

Demystifying the Real Estate Commission

What do real estate agents charge? Hi, I'm Jerry McHone with the Whissel Realty group. And I want to answer one of the most common questions I get, which is what do you charge? So let's break it down and let's talk about what real estate agents charge.

How do Real Estate Agents Make Money

Real estate agents make all their money from commission. That means they only get paid if and when a deal closes. Now we get paid a commission, which means we get paid a percentage of the sales price. While in California, commissions are negotiable by law, there's still standards within the real estate industry.

Typically in California, we see between 4 and 8% as the amount that's paid as a commission. Now that percentage is then split between the agent that represents the seller and the agent that represents the buyer. Now you might be thinking, "Why is there such a big range of what agents charge?" Well, different agents charge different amounts very similar to how Walmart and Nordstrom have very different prices. They're both retail stores, but they charge different amounts and there's going to be a vastly different experience whether you go to one or the other.

The Discount Agent

There's also going to be a big difference in the quality of the product you get from one to the other. Let's talk about the discount agents. They're the agents that have the Walmart business model for real estate. What that means is that they're going to charge less however, they're also going to have a lower level of service and a lower level of quality.

But if they sell enough of their product, they're going to make up for it with volume. This agent's typically not going to charge as much in commission, but they're also not going to invest as much into things like marketing or hiring a professional to do things like take photos, schedule the showings, or audit their contract. They're probably going to be taking a lot of that themselves. In addition, because they have to have more clients to make up with that volume, they're going to have less time each day to devote to each client and to negotiate each deal.

Premium Agent

On the other hand, we have agents like myself that have more of the Nordstrom business model. What that means is that while they charge a little bit more, they're investing a lot more into things like marketing, internet marketing, hiring professionals to take photos and videos, and also delegating things like scheduling showings and auditing a contract to professionals. What this also does is this allows them to take more time each day and devote it towards each client and devote more time into negotiating each deal.

If you have questions about what I charge or what some of the pros and cons are of hiring a discount agent versus an agent like myself, that's a little bit more full service, drop a comment below, or reach out to me via DM or at 619-971-0971. I'm happy to chat with you about it.

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