BrokerageIndustry News

Real estate: Location, location, commission

Market conditions can drive compensation practices

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By GILBERT MOHTES-CHAN In today's rugged economy, location can be a key driver in real estate commission rates throughout California, say agents and brokers across the state. Commissions can run up to 7 percent in regions saddled with foreclosures and sales of bank-owned homes, for example, while a more typical range in the luxury market of Pacific Palisades is 5 percent to 6 percent, and in some rural areas agents report commission rates on the order of 5 percent, said agents and brokers interviewed for this article. Those total commissions rates -- the percentage that brokers earn based on the selling price of a home -- are typically split between a broker representing a seller and a broker representing a buyer in each transaction. And while there may be regional norms, specific rates can vary depending on the brokerage company and individual agent -- also, some brokers offer alternative fee structures that are not based on traditional percentage-based commission rates. Ge...