Why are we still paying 6% commission to a real estate agent when we sell our homes? Twenty years ago, here in southern California, a 2000 square foot house sold for around $125,000. So a 6%commission was about $7,500, not bad for its time. Today the same 2000 square house house sell for $800,000. So today that 6% commission will cost you $48,000. More then a lot of people make in a year. We go along, with this exorbitant commission, because we have the money at the moment and most likely you are making a tone of money selling your home. Plus everyone is doing it. But we are just rationalization our dumb American behavior.
I know that the commission is split between the selling and listing agent and then again between the broker and the agent. But that is still roughly $12,000 each. But the $48,000 is still allot of money to sell your home.
If you cut a deal with your agent you might be able to reduce the commission to 4% if your listing broker and selling broker are one in the same. But I see a problem, why should a selling agent sell your house for 3% when he/she has more then they can sell at 6%. So your house just sits….
Nothing will change until the entire Real Estate industry changes. There needs to be an across the board reduction in the commission structure period. There need to be an end to the absurd amount of money we pay to sell our homes.