Our homes tend to be our most significant investments in our life times so when selling, we want to maximize our net proceeds as much as possible. The old adage, "...you get what you pay for..." strongly applies and you may not be getting the best results and value when hiring the cheapest or most expensive agent. So what can you expect when getting the answer to the question, “…How much are real estate commissions when selling Palos Verdes homes?…”
How much are real estate commissions when selling Palos Verdes homes?
To answer this question, I looked at the nearly 100 properties now for sale in Palos Verdes and then wrote down for each of those properties, what the commission was that is offered to the broker representing a Buyer. In nearly all cases, the commission paid to the broker representing the buyer is the same as the commission paid to the seller’s broker. In other words, when we see that 2.5% commission is offered to the buyer’s broker, we can assume that the total commission paid by the Seller is 5.0%.
“…rate of real estate commissions is not fixed by law…”
On the first page of the California Association of Realtors Listing Agreement, it states in bold, large font the following disclosure, “… Notice: The amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between Seller and Broker (real estate commissions include all compensation and fees to Broker)…”
Back to my study of active listings and the commission schedules pertinent to each of the homes for sale, I put together this standard deviation distribution graph…
As you can see, for the most part, commissions are around the 5% level however there are a few that are as low as 4% and a few that are as high as 6%.
frequently asked questions by clients of mine
Q1: What makes the difference between a lower and higher commission?
A1a: There are usually two categories that are factors and sometimes a combination of these two categories. One is the asking price at which the client chooses to list their property. For example, let’s say the property’s most likely value as determined by what a buyer will pay is $2,000,000. Let’s further assume that the seller is super motivated due to extreme life events and that extracting the highest price, while important, is NOT as important as selling fast; REALLY fast. As such, the seller elects to list the property for 10% under market. That action in all likelihood will result in a near immediate sale. That might be a condition whereby a broker realizing their overhead costs will be very low, agrees to negotiate a commission structure under 5%
A1b: The other category is the menu of services the seller and broker decide to implement. Some clients require a full menu of service and expect the broker to pay for all marketing, other clients do not require a full menu of services and/or pay for some marketing services. This too will create adjustments up or down to the commission schedule.
Q2: Do you have copies of both a typical listing agreement and a purchase agreement we can study to get familiar with the language before we sign anything?
A2: You can download or view online both agreements from my google drive. Listing Agreement and Purchase Agreement
Q3: What makes your marketing unique and why should we hire you?
A3: The business of marketing real estate has remained unchanged for decades and decades. There are two underlying facts that form the marketing strategies of every local broker (except for one, me). The two facts are:
They don’t know how many buyers are in the marketplace shopping for a home that matches your home’s characteristics and
Not only do they not know how many buyers there are, they obviously, as a result of not knowing how many there are, they don’t know who they are
Imagine knowing the answer to both of these problems. If you knew how many buyers there were shopping for a home like yours today and who they were, focused strategies on those buyers will increase demand to the point that your home sells faster and for more money. You can view a copy of a report I prepared for one of my clients recently who wrote me this review after we closed escrow. He realized that there was no other broker better qualified to create a “gravity well” to bring buyers to his home.
Q4: What are typical closing costs when we sell our house?
A4: I have an interactive spreadsheet I can email you that will calculate closing costs across an array of possible sale prices. Use the “CONTACT US” button at the top right of this page, then click where shown in this screenshot. You can use this form to ask any other questions and if you’d like to schedule a virtual meeting, meet for coffee or just talk on the phone, use the “schedule time with me” blue calendly tab at the bottom of this page or just text or call me at the number you see on the bottom right of this page.
Q5: Is it a buyers or sellers market right now?
A5: Too often I find that real estate agents answer this question with anecdotes or opinion and not with facts. In order to understand whether a market is a buyers or sellers market, we have to know what the numbers are for supply and demand AND we have to know how those forces of supply and demand have changed. I have proprietary indicators that I’ve developed over 40 years in this business that are based on on the numbers for supply and demand changes. And the numbers don’t lie; they are what they are. Contact me as shown above to get the most recent information
Q6: What are the duties of a successor trustee?
A6: I would refer you to this article for a general guideline as the job that is in front of you as a successor trustee https://www.palosverdeshomesbest.com/blog/what-should-i-do-as-a-successor-trustee
Q7: What are the top 5 ways to prevent real estate fraud?
A7: Go to this site and get the answers. There’s a bonus link in the article too about how to prevent title fraud which won’t cost you a penny!
Q8: What are the three most important tasks on day 1 after you contracted for the purchase of your next home?
A8: In no particular order because EACH of these three topics is EQUALLY important and are vital timeline tasks for you to complete, the three most important tasks are obtaining homeowner insurance, getting your loan processed, and organizing your home inspections. The successful completion of each of these tasks should be critical contingency points in your accepted offer. If they are not, were you able to negotiate concessions from the seller to compensate you if you removed any one or all of these contingency points? Let's go over these items one by one.
Insurance:
Obtaining homeowner insurance in California has become increasingly difficult in the last few years. We can argue about the "why" this is so, but pragmatically, the why doesn't matter. It is a fact; that getting homeowners insurance is exponentially more difficult given the fact that many providers have simply abandoned California as a very non-friendly state within which to conduct insurance business. At the time of this writing, in the last year, State Farm, Farmers, USAA, Kemper and Beaverton, and The Hartford, are no longer writing new policies. In the old days, we could wait until 2 or 3 days before the close of escrow to get an insurance binder that would satisfy a Buyer's lender before they fund the loan to affect the close of escrow. Because of the short supply of carriers now, you must start shopping insurance companies immediately upon getting your offer accepted. Be prepared to accept the terms of the "California Fair Plan". https://www.cfpnet.com/ Coverage is not optimal, but it will satisfy most lenders. If you would like a referral to expert insurance brokers that can help you, go to my website at https://palosverdeshomesbest.com and use the "Contact Us" tab at the top right of any page or call/text me at the number that pops up on the bottom right of the screen. The consequence to you if you don't get this done in time is a breach of contract and possible loss of your earnest money deposit (usually 3% of the purchase price)
Loan Processing:
Depending on your financial profile (are you a W2 person, 1099 self-employed, or maybe you're compensated through a K1 partnership filing), getting your loan processed can face many delays. Hopefully, before you even wrote an offer, you were able to flush out any "potholes" on the road to getting a loan through your preapproval process. Even so, if the preapproval was not at the level of complete underwriting approval, then surprises could arise. I've always maintained over my 43+ years in this business, "...if there's good news, let's know fast; if there's bad news, let's know faster!..." Therefore acting IMMEDIATELY on any questions or information requests your lender makes of you the VERY MOMENT they ask, becomes an essential task for you to do. This doesn't mean responding the next day, or later in the day after your lender makes a request, this means dropping everything else you're doing, no matter how important, and replying to your lender with the information they request. Trust me on this, some of these requests will be aggravating, and you will consider them a nuisance, but the simple fact remains that the 21st century definition of the "Golden Rule" is alive and well... if you want the man's gold, you do want the man asks.
Home Inspection:
We're back to my good news/bad news rule from above. Even before you've entered into escrow, you should have interviewed at least three home inspectors. Know which one you're going to retain before you make an offer on a home. At least make sure you have selected one by the time your offer is accepted. What of the property? When you toured the property, did your agent spot any "red flags" that might require further investigation than what a general home inspector can provide? For example, home inspectors almost always use language in their reports to cover their liability. This manifests itself in many different ways. One way that comes to mind is walking through a house that has a noticeable slope to the floors. This observation is obvious. But a home inspector is merely going to make the observation and remark that further investigation by specialist in this field (structural engineer or foundation contractor) be conducted. Knowing this when you tour this hypothetical property, your agent should be competent enough to say to you that a general home inspector will not be adequate and that you should also hire a structural engineer to investigate. You might as well "bite the bullet" and get this inspection ordered immediately without waiting for the written report from the general home inspector. This is one of many areas in which the experience of the real estate agent or broker (I am a real estate broker) becomes vital. Inexperienced agents just won't know how to reduce your stress by anticipating these "potholes" in the road leading to a successful close of escrow.
All three of these tasks must be executed on DAY 1 after the acceptance date of a contract. If you need any further information or would like to discuss other points that will reduce stress and help you not lose money or the home you really want to own, contact me now.
Q9: How can I pinpoint specific price ranges across the Palos Verdes Peninsula?
A9: Watch the short video on this page and use the map linked in the article here
Q10: How do you know whether to lock in interest rates or let them float when you've applied for and are getting approved for a loan?
A10: It depends on the buying an selling activity of the 10 year treasury security. This is this financial instrument on which most 30 year loans are based. This answer was written on 4/12/2024 and I promise that the chart will look different in a few days. If you want an updated analysis on this question, use the “Contact Us” tab at the top of this page.
Back in late December ‘23 and January ‘24 I was advising clients buying property to lock in rates as interest rates hit a low point on the chart. Right now if you’re buying, I would advise the opposite. Contrary to what you’re hearing on the news, I believe 30 year mortgages will drop a bit in the next few days. Am I right? Time will tell.
Q11: What is the easiest way to find beachfront homes and oceanfront homes in Southern California
A11: It’s not as easy as you think. You would have to know the streets and type in the streets in whatever search platform you use* or you can do it quickly and easily using the tips in this site. It will take you less than 2 minutes to read this blog post and even faster to start searching https://www.palosverdeshomesbest.com/blog/do-you-know-where-the-best-california-beachfront-homes-are Play the video too on this site
The information contained on this Website and the resources available for download through this website is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information contained on this Website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided on this Website and the resources available for download are accurate and provide valuable information. Regardless of anything to the contrary, nothing available on or through this Website should be understood as a recommendation that you should not consult with a financial professional to address your particular information. The Company expressly recommends that you seek advice from a professional. #interestrates #markettrends #realestate #palosverdes #palosverdeshomes
