Commissions-How they Work & How You Save – East Bay Discount Realtor®
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Steve Lederman
Listing Agent - Broker

Commissions-How they Work & How You Save

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Steve Lederman
Listing Agent – Broker

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Commissions – How they Work & How You Save

Many Sellers understand how commissions work on a general level when listing and selling a home. However because it is the most expensive cost for a seller and considering there are fine distinctions to commission strategies, I believe it is time well spent and can be profitable to go over this information.

There are two sides to each sale or listing when it comes to commission costs, the listing side (listing agent represents the seller) and the buyer’s side (buyer’s agent represents the buyer) . A traditional listing commission is typically between 5% and 6%, to be split 50/50 between listing agent and buyer’s agent.   Using 5% as an example, the listing agent would receive 2.5% and the buyer’s agent would receive 2.5% which equals the total of 5% (2.5%+2.5%=5%).

How You Save-Listing Agent

Bay Select Realty reduces the listing agent commission (representing the seller) with our two programs.  Bay Select Realty Full Service is .60% vs 2.5% (traditional commission) which equals 76% savings to you OR Bay Select Realty Full Service PLUS is 1% vs 2.5% (traditional commission) which equals a 60% savings to you.

How You Save-Buyer’s Agent Commission

Let’s stop here and answer a series of material questions regarding savings on the Buyer’s Agent’s commission:

Question: Is it necessary to have a buyer’s agent and a pay a buyer’s agent commission?

Answer: Yes, if you wish to benefit from the fact that 82% of ALL buyer’s use a real estate agent to find their house on MLS (Multiple Listing Service). With this information logic suggests if you want the highest probability of obtaining the highest purchase price, you therefore want maximum exposure through MLS (and pay a buyer’s agent commission).

Question: Is it necessary to offer 2.5% to have a buyer’s agent show my house or can I offer less, for example 2.25% or even less than that?

Answer: Yes you can offer less than 2.5% and many of my clients offer 2.25%. It is entirely up to you the seller what you want to offer the Buyer’s agent for commission. Very few of my clients drop below 2.25%; however there are several variables a seller might consider before making their final decision. For example: Is there a lot of competition in the market (active listings competing with your home)? What are the commissions being offered by the competing active listings? What is the purchase price of your home, for example 2.00% of a $1,000,000 is still a lot compensation for a buyer’s agent commission. Also generally speaking is it a seller’s market (low inventory) or a buyer’s market (high inventory)?   As a matter of policy, I analyze these variables with you the seller and discuss options with you when considering a buyer’s agent commission.


My goal in this information is reaffirm some basic understanding of how commissions work and to provide total clarity on how Bay Select Realty saves sellers with our reduced fee listing commission.   I also wanted to speak in detail how we assist sellers in deciding how to compensate a buyer’s agent in order to provide a high incentive to show their house and perhaps to achieve additional commission savings, all while receiving full service representation through