San Francisco Realtor Fees
Are San Francisco Realtor fees worth it? Well, it depends on the value and quality of your San Francisco Realtor. But as a general rule of thumb in San Francisco real estate, like in all things, you tend to get what you pay for.
It’s a new year, and the San Francisco real estate market is waking from its seasonal slumber. Dozens of homes, still warm from winter fires, are shedding their decorative holiday coats in favor of neutral staging decor. Neighborhoods soon will swell with eager buyers on the hunt for their dream homes. If you’ve been thinking about selling your San Francisco home, now is a great time to get down from the fence and find an agent to list it on the market. But which agent should you choose, and how much should you pay them?
Doing the Commission Splits
Across the country, the standard commission rate that a seller pays their listing broker for helping to sell their home tends to hover between 5 and 6%. According to data from the National Association of Realtors®, the average commission in 2019 was roughly 5.7%. Since real estate commissions are not officially regulated, it’s up to the seller and their agent to settle on a fair fee. That makes it important for sellers to know what they’re getting in return for the agent’s cut. So what does your commission get you?
The first thing to understand about commissions when selling your San Francisco home is how that money is divvied up. Say you agree to pay your listing agent 6% of the selling price. That 6% does not go straight into your listing agent’s pocket. In fact, he or she will likely only receive a fraction of that amount, maybe around 25 to 40%. That’s because, as the seller, you are actually paying both the listing agent and the buyer’s agent. But wait, there’s more! Let’s explore how a standard real estate commission breaks down.
First off, your 6% commission goes to the listing agent’s side. Per your listing agreement, the listing agent denotes what amount of that 6% they will pay to the buyer’s agent for making the deal happen, usually around 2.5 to 3%. Of course, the buyer has their own costs to worry about, from appraisals to inspections to insurance and more. However, they don’t directly pay their agent to help find them a home. Instead, the buyer agent gets about half of that 6% from the listing agent when the transaction is closed.
What’s more, agents on both sides of the transaction pay a substantial portion of their earnings to their parent brokerage. From the 3% portions designated for the listing agent and the buyer’s agent, up to half of that may end up going to their brokers. So, instead of 6%, or even 3%, the agents might walk away with 1.5% apiece from the total sale price. While that’s not necessarily a meager sum, as homes routinely sell for hundreds of thousands or millions of dollars, it’s a far cry from the glaring 6% that turns the stomach of many prospective San Francisco home sellers.
So your listing agent doesn’t necessarily get a big 6% payday out of your closing price. Even so, if you receive poor, inattentive service from your agent, then any amount will feel like too much. What should your agent do to earn their pay? And what expenses does a listing agent accrue in the process of selling your home? Most marketing practices involved in listing a San Francisco home for sale do incur costs out of the listing agent’s pocket.
Successfully selling San Francisco real estate in this digital age requires a keen eye for web-based marketing. By 2017, up to 95% of buyers were using online search to find a home, and it’s only increasing. That means that professional media including photos, videos, social media and email marketing now play a critical role in improving your home’s visibility to the prospective buyers. Your listing agent should provide marketing multimedia which portrays your home in its best light, and your commission helps to pay for those professional services.
Of course, the “new school” of marketing hasn’t replaced the “old school.” Your San Francisco real estate agent should include print and mail marketing in their plan. Postcards, flyers and brochures all remain relevant marketing tactics to let the neighborhood know that your home is for sale. And each of those methods costs money for printing, postage, design, and so on.
Most of all, your agent’s commission pays for their time and expertise. Hosting open houses, managing marketing campaigns, coordinating vendors like staging and inspections—if done right, each of these aspects of selling a home takes considerable time and effort. A good agent will also spend the time to field your questions, devise a strategy for success, negotiate on your behalf, and ensure that you are comfortable and informed at every step.
You Get What You Pay For
As with any profession, there are good and bad apples among San Francisco Realtors. Just because John Q. Agent charges 6% doesn’t necessarily mean he’ll do a good job of selling your San Francisco home. However, from a purely mathematical perspective, an agent who provides a “discount” service is simply unable to provide the time, the personal care, or the professional marketing required to make your sale a resounding success.
Choosing an agent based on a low fee, or choosing to sell on your own (known as FSBO, or “For Sale By Owner”), is much more likely to backfire than it is to save you any money. In 2017, FSBO sales accounted for 7% of homes sold nationwide. The average FSBO sale price was $200,000, compared to $265,500 for homes listed with an agent. While it’s not a perfect apples-to-apples comparison, the difference of over 32% is stark, and it’s much greater than a potential savings of 6%. Not to mention, doing it yourself means, well, doing it yourself. Selling a home can be very stressful, and working with an experienced team will benefit your sanity as well as your bottom line.
In short, here’s the big takeaway: when you’re thinking about selling your San Francisco home, there’s a number of criteria you should look for. “Lowest commission,” frankly, shouldn’t be that high on your list. You should choose your agent based on their competence and experience. Their honesty and reliability. Their track record. By how well their personality and schedule fit with your own.
A great San Francisco real estate agent is worth every penny. Lucky for you, we happen to know some of the best. We have dozens of happy client reviews, years of experience in your neighborhood, and a veteran team of dedicated admin and marketing staff. If you’re thinking about selling or buying a home in San Francisco, or if you just want to discuss the current San Francisco real estate market, get in touch to start a no-pressure conversation. We’re always happy to hear from you.