Can a Seller Pay the Buyer’s Agent Commission in California?

Yes. A California seller can agree to pay some or all of the buyer’s agent compensation, but the amount is negotiable and the seller is not automatically required to pay it. Under the current rules, the buyer and buyer’s agent establish compensation in a written buyer-broker agreement, and the buyer can then ask the seller to cover some or all of that amount as part of the purchase negotiations.

What to know

The biggest change is that buyer-agent compensation is no longer handled the way many buyers and sellers remember.

Beginning January 1, 2025, California law requires a buyer-broker representation agreement as soon as practical, but no later than when the buyer submits an offer. The agreement must address the broker’s compensation, services, when compensation is due, and termination terms. For agents subject to the NAR settlement rules, a written agreement is generally required before touring a home.

A buyer can ask the seller to pay some or all of the compensation owed to the buyer’s broker. The seller can accept, reject, or counter that request. California’s Department of Real Estate specifically identifies seller payment as one of the options available to buyers.

What has changed is where compensation can be advertised. NAR-affiliated MLS systems cannot display offers of buyer-broker compensation. Sellers and listing brokers may still negotiate compensation outside the MLS, and seller concessions can still be advertised through the MLS when permitted.

For Riverside-area sellers trying to understand where these expenses fit into the overall transaction, this guide to seller closing costs in Riverside County gives useful context. Another helpful explanation is how Realtor fees are handled at closing in Riverside.

Why it matters

Seller-paid buyer-agent compensation can affect both the attractiveness of an offer and the seller’s final proceeds.

Some buyers have enough available cash to cover their down payment and closing costs but may find it difficult to pay their agent separately. Asking the seller to cover that expense can reduce the amount of cash the buyer needs at closing.

For the seller, the better question is usually not simply, “Am I paying the buyer’s agent?” It is, “What do I net from this offer?”

For example, a higher-priced offer that asks for buyer-agent compensation and other credits might leave the seller with less money than a slightly lower offer with fewer concessions. A seller net sheet makes that comparison much clearer. Grove Realty’s guide on estimating net proceeds from a Riverside County home sale explains the same idea in more detail.

Examples

Here are a few common ways this can work in practice:

• A buyer has agreed in writing to compensate their broker 2 percent. Their offer asks the seller to pay that 2 percent at closing. If the seller agrees, escrow can handle the payment from the seller’s proceeds according to the written transaction instructions.
• A buyer asks the seller to pay only part of the buyer-broker fee. The buyer remains responsible for any amount still owed under the buyer-broker agreement.
• A seller receives two similar offers. One requests substantial credits and buyer-agent compensation, while the other requests very little. The seller can compare the estimated net proceeds rather than choosing based only on the purchase price.
• A seller may decide not to pay buyer-agent compensation at all. The buyer then needs to determine how their contractual obligation to their broker will be handled.

For brokers covered by the NAR settlement, compensation received from all sources cannot exceed the amount or rate agreed to in the buyer representation agreement. Commissions also remain fully negotiable.

What to keep in mind

Mortgage rules can also affect how seller contributions are structured. Fannie Mae treats common and customary seller-paid costs differently from ordinary financing concessions, while FHA has said reasonable seller-paid buyer-broker commissions may not be treated as interested-party contributions when applicable requirements are met. VA rules also allow buyers and sellers to negotiate payment of real estate professional fees.

That is why the buyer’s lender should review the structure before everyone relies on a particular credit or payment. The purchase agreement, buyer-broker agreement, listing agreement, lender requirements, and escrow instructions all need to work together.

Sellers should also remember that buyer-agent compensation is only one part of the financial picture. Escrow fees, title charges, transfer taxes, repairs, credits, loan payoff amounts, and other expenses can affect the final result. The Riverside home-selling process guide is a useful overview of how those pieces fit together.

One simple next step

Before accepting an offer, ask your agent for a seller net sheet showing the purchase price, buyer credits, buyer-agent compensation, and estimated closing costs side by side. For a Riverside County transaction, Marni Jimenez can help you compare the terms and understand what each offer is likely to leave you with at closing.