3.5% Commission or Less to Sell Your Home
Buyer Rebates of up to 50%
(1% Or Less to Us, 2-2.5% to Buyer's Agent)
Or More of Our Commissions
Frequently Asked Questions from real estate buyers and sellers
These are Frequently Asked Questions, not Frequently Answered Questions. We get many questions in regards to the rationale of the commission structure in the real estate industry.
Q. I bought my home in 1999 for $750,000. The buyer's agent commission back then was 2.5 percent, or $18,750. Today my home is worth about $1.7 million. If I sell the house today why should I have to pay a buyer agent commission of 2.5 percent, or $42,500?
Q. My wife and I went to twenty open houses and found a property we liked. We contacted an agent to write-up our offer. Why does that agent make 2.5 percent commission when we did most of the work? We plan to remodel and sell the house. Can we offer the buyer's agent a 1 percent commission when we sell?
A. We refer these types of questions to the DANGER Report, mentioned on our home page.
Q. How is the commission rebate determined, and what is your fee if I am selling a home?
A. Our home buyer commission rebate is about 1-1.25 percent of the purchase price. A buyer's agent commission is normally between 2.0 percent and 2.5 percent of the sale price. If our home buyer commission rebate is 50 percent of what we are paid by the seller, the buyer's rebate is 1.0-1.25 percent. If the sale price is exceptionally large, or if there are special circumstances we may even rebate more. The buyer rebate may be restricted by lender policy, so the lender must be notified of the rebate. Lenders do not like it if a large part of a buyer's down payment is coming from a rebate or credit. FHA and VA lenders are more likely to restrict the amount of the rebate. And we have a minimum commission, so if the sale price is less than $500,000 our commission rebate would typically be less than 50%.
Our commission to sell a home is one percent. The seller will also have to pay a commission to the buyer's agent of 2-2.5 percent. Commissions are moving towards 2 percent in some locales. In Southern California about 5-15 percent of transactions are done at 2.0 percent to the buyer's agent, depending on the city.
Q. Is it a good time to buy, and what do you think will happen with mortgage rates?
A. California's population continues to grow, but restrictions on new construction make it difficult for the supply of housing to keep up with demand. Over time this favors higher prices. We don't know what will happen over the short-term, and we are not able to identify the ideal time to buy. But it is usually a good idea to look. As it says in scripture, "He that observeth the wind shall not sow; and he that regardeth the clouds shall not reap."
Q. What areas do you cover, and do I need a "Local Expert"?
A. People can get listing information and detailed sales histories for free on the Internet today. Previously, real estate professionals had a monopoly on this information. Just as video killed the radio star, and as Netflix has done to Blockbuster Video, and as Apple has done to the local music store, and as Priceline and Expedia have done to the local travel agency, and as Uber and Lyft are doing to the taxi industry - the Internet has greatly diminished the role of the "Local Expert." As a result more and more buyers and sellers today prefer to use a discount Realtor or a discount real estate broker that offers reduced listing commissions and that provides commission rebates and commission credits to home buyers.