Yes, a California seller can still pay the buyer's agent. What changed is that it is now a deliberate decision made in writing, not a number your listing agent posts on the MLS for every buyer's agent to see. Since August 17, 2024, under the practice changes that followed the National Association of REALTORS® (NAR) settlement, offers of compensation to buyers' agents cannot appear on the MLS. You can still make one off the MLS, offer a credit toward the buyer's costs, or negotiate it when an offer arrives.
Buyers' agents now have written agreements with their own clients that set their pay. So the question for an Orange County seller is no longer what to offer every agent, but how much, if anything, to put toward this buyer's costs, and in what form. The form matters, because loan programs treat a seller-paid buyer's agent fee differently from a general credit to the buyer.
What changed for sellers in August 2024
Sellers and listing agents used to set both agents' compensation when the listing agreement was signed. The California Department of Real Estate (DRE) now tells consumers that sellers and listing agents no longer determine the buyer's agent's compensation.
Under the NAR rules, which REALTOR® association MLSs had to adopt by August 17, 2024:
- No compensation on the MLS. Your listing cannot carry an offer to buyers' agents, including a yes/no field or a note in the agent remarks.
- Off-MLS offers are still allowed. With your approval, your agent can communicate one through other channels.
- Concessions can still appear on the MLS where the local MLS allows it, such as a credit toward the buyer's closing costs, as long as it is not conditioned on paying a buyer's agent.
- The buyer's agreement sets the ceiling. Whatever you offer, the buyer's agent cannot receive more than their written agreement with the buyer provides.
California adds its own rule: since January 1, 2025, Civil Code section 1670.50 has required every buyer's agent in the state to have a written agreement with the buyer, signed no later than the buyer's offer.
Start with your listing agreement
Compensation is negotiable and set in writing. Under Business and Professions Code section 10147.5, a form listing agreement for a home of one to four units must state, in bold type right before the compensation terms, that commission rates are not fixed by law, are set by each broker individually and may be negotiable between seller and broker. The amount or rate cannot be pre-printed on the form, and NAR's rules require a similar conspicuous disclosure.
Your written approval comes before any payment to a buyer's agent. Under NAR's rules, your listing agent must disclose to you in writing, and get your approval, before offering or paying anything to an agent representing a buyer, and the disclosure must state the amount or rate. NAR's consumer guide gives examples such as a flat fee paid directly to the buyer's agent or a share of your listing agent's compensation.
Other required disclosures. Before you sign, your agent must give you California's agency disclosure form, which explains whom agents represent. And under California law, a broker may not claim compensation under an exclusive listing that lacks a definite end date.
At listing, settle three things with your agent: whether you authorize an offer of compensation at all, the most you would contribute if a buyer asks, and whether you prefer a direct fee or a credit.
Three ways to contribute, if you choose to
1. Advertise an offer off the MLS
Your agent can share an offer through your brokerage's website, flyers, signs, social media, or by phone or email. NAR allows a brokerage to show compensation on its own listings on its website, but an MLS listing cannot carry a one-click link to the offer. Advertising tells buyers' agents what to expect, but it commits you to a figure before you know who the buyer is or how they are financing.
2. Offer a concession toward closing costs
NAR treats a seller concession, such as a credit toward the buyer's closing costs, as different from an offer of compensation. It can be shown on the MLS where the local MLS has a place for it, and NAR notes it generally is not binding until written into a contract. A buyer may be able to apply a credit to their own costs, including their agent's fee, but loan limits apply.
3. Negotiate it in the offer
Advertising is optional. A buyer can always ask in the purchase offer for the seller to pay some or all of their agent's compensation, and you can accept, decline or counter. This keeps your options open, though buyers who need help have to ask.
How your choice affects the buyer pool
NAR's position is that offers of compensation can widen a seller's pool of buyers by lowering up-front costs, particularly for first-time buyers. A buyer who owes their agent has to cover that fee on top of the down payment and closing costs unless the seller helps.
NAR's rules also bar REALTOR® members from filtering out listings for their clients based on whether, or how much, compensation is offered, so offering nothing should not keep your home off their clients' lists. The real question is whether a particular buyer can afford it on your terms. Buyers paying cash or putting a lot down may need no help; buyers using low-down-payment loans have the least room.
How loan programs treat seller-paid fees and credits
Fannie Mae, Freddie Mac and FHA each limit interested party contributions, meaning payments by a seller or another party with a stake in the sale toward costs that are normally the buyer's.
A seller-paid buyer's agent fee, paid in line with local custom, generally does not count against those limits.
- Fannie Mae said in an April 15, 2024 selling notice that when a seller or seller's agent continues to pay the buyer's agent commission according to local common and customary practice, it does not have to be counted toward its limits.
- Freddie Mac said in a June 5, 2024 FAQ that such fees are excluded from its financing concession limits as long as the practice remains customary.
- FHA said in a March 28, 2024 notice that seller-paid buyer-side commissions and fees, paid under state or local law or custom and reasonable in amount, are not interested party contributions. Its handbook carries the same exception.
A general credit to the buyer does count. For a principal residence or second home, Fannie Mae caps contributions at 3% of the lower of price or appraised value when the loan-to-value ratio is above 90%, 6% from 75.01% to 90%, and 9% at 75% or less, with 2% for investment properties. FHA's limit is 6% of the sales price. Amounts beyond the cap, or beyond the buyer's actual closing costs, reduce the price used to size the loan. Fannie Mae's definition of closing costs includes real estate agent commissions, so a credit the buyer applies to their agent's fee generally uses up room under the cap.
For a buyer putting little down, a credit covering both their agent and their closing costs may exceed what the loan allows, while a direct payment to their agent may not count at all. The buyer's lender decides how a specific payment is classified, so write it clearly into the contract and have the lender review it. VA loans have their own rules on seller concessions and buyer-broker fees, so ask the buyer's lender how any payment would be treated (our VA loans guide covers the program basics). Jumbo loans, which are above the size Fannie Mae and Freddie Mac can buy, follow the lender's own guidelines.
What it means for your net proceeds
Any payment to the buyer's agent or credit to the buyer comes out of your proceeds, just as a lower price would. Compare offers by the bottom line: price, minus your listing agent's compensation, any buyer's agent payment or credit, repair credits and other closing costs. A higher offer that asks you to pay the buyer's agent can net less than a lower one that does not. A credit also keeps the contract price above what you receive, and for a financed buyer that price still has to appraise.
For federal taxes, sales commissions you pay are generally selling expenses that reduce the amount you realize on the sale; our guide to capital gains tax on California home sales explains how that fits into your gain. This is general information, not legal or tax advice. For a specific contract, talk with a California real estate attorney, and for tax questions, a CPA.
Negotiating it when it shows up in an offer
Treat a request to pay the buyer's agent as one term among several, alongside price, loan type, down payment, contingencies and closing date. Your options include:
- Accept the request as written.
- Counter with a lower amount, or a fixed dollar figure instead of a percentage.
- Offer a credit toward closing costs instead, if the buyer's loan has room under its cap.
- Adjust the price rather than paying a fee or credit.
- Decline. The DRE notes that the buyer then remains responsible for paying their agent if they go ahead.
A buyer's request does not change your listing agreement; if you agree to pay, you and your listing broker can amend it. A REALTOR® representing the buyer may not delay or withhold the buyer's offer while trying to negotiate compensation. Put every term in writing: the DRE reminds consumers that all agreements and changes must be written, and spoken promises about fees are not enough.
How Remark Homes can help
We are a veteran-owned brokerage in Tustin, and we work through buyer's agent compensation with sellers before the home goes on the market: whether to offer anything, in what form, and what likely buyers' loans will allow. When offers arrive, we compare them by your net, not just the price. Learn more about selling with Remark Homes or contact us to talk through your home.
Frequently asked questions
Do sellers still pay the buyer's agent commission in California?
They can, but it is optional and negotiable. Since August 17, 2024, the offer cannot appear on the MLS, so it is made off the MLS or negotiated in the purchase contract.
Does paying the buyer's agent use up the buyer's limit on seller contributions?
Under positions Fannie Mae, Freddie Mac and FHA published in 2024, a seller-paid buyer's agent fee paid in line with local custom generally does not. A general credit to the buyer does, so the buyer's lender should review the structure.
Is my listing agent's commission negotiable?
Yes. California law requires listing agreements for homes of one to four units to state that commission rates are not fixed by law and may be negotiable.
Sources
- NAR: NAR Settlement FAQs
- NAR: Consumer Guide, Offers of Compensation
- California DRE: Consumer Alert on changes to real estate representation
- Fannie Mae: Selling Notice, Real Estate Commissions and Interested Party Contributions
- Freddie Mac: Buyer Agent Commissions Paid by Property Sellers or Their Agents
- HUD: FHA INFO 2024-12, FAQ on Seller-Paid Commissions
