Can Realtor Commissions Be Negotiated in California?

Yes. Realtor commissions in California are negotiable, and there is no legally required or “standard” commission rate that a seller or buyer must pay. California law specifically requires residential real estate agreements to disclose that compensation is not fixed by law and may be negotiated between the client and broker.

That applies to both sellers and buyers. The amount, how it is calculated, what services are included, and in some cases who ultimately pays the compensation should be discussed before signing an agreement.

What to know

When a homeowner hires a Realtor to sell a property, the listing broker’s compensation is agreed upon in the listing agreement.

There is no California law that says the listing commission must be a certain percentage. A seller and brokerage can discuss the services being provided and negotiate the compensation as part of that agreement.

The same general principle applies to buyers, although the process has changed in recent years.

Beginning January 1, 2025, California law requires a buyer and buyer’s agent to enter into a written buyer-broker representation agreement as soon as practical, but no later than when the buyer makes an offer. The agreement must address the broker’s compensation, services, when compensation is due, and how the agreement can be terminated.

For many Realtors and MLS participants, a written agreement is generally required before touring homes with a buyer.

Buyers who want a better understanding of the entire purchase process can also review the Grove Realty Buyer’s Guide.

Why it matters

Negotiating commission should not simply be about finding the lowest percentage.

What matters is what you are receiving for the fee.

For a seller, that may include pricing advice, home preparation, staging guidance, professional photography, video, online marketing, open houses, showing coordination, contract negotiation, inspections, disclosures, appraisal issues, and managing the transaction through closing.

The Grove Realty Seller’s Guide explains more about what goes into preparing, marketing, negotiating, and closing a home sale.

A lower commission can certainly save money, but it is worth looking at the entire picture. Saving money on the fee may not help if the home is poorly marketed, incorrectly priced, or the agent is less effective during negotiations.

The better question is often, “What am I paying, and what am I getting for it?”

How buyer-agent compensation works now

One of the biggest sources of confusion involves the buyer’s agent.

Since August 17, 2024, offers of buyer-agent compensation can no longer be published through an MLS under the NAR settlement rules. That does not mean sellers are prohibited from paying a buyer’s agent.

A buyer and buyer’s agent first agree on the agent’s compensation in writing. The buyer may then ask the seller to pay some or all of that compensation as part of the purchase negotiations.

The seller can accept that request, reject it, or negotiate different terms. California’s Department of Real Estate specifically recognizes these options.

For a more detailed explanation, read Can a Seller Pay the Buyer’s Agent Commission in California?.

Examples

Imagine a homeowner is interviewing three Realtors to sell a home.

One agent offers a lower fee but provides limited marketing. Another charges more but includes professional photography, video, staging assistance, extensive online marketing, open houses, and hands-on negotiation.

Both commission arrangements may be perfectly valid. The homeowner has to decide which combination of cost, service, experience, and marketing makes the most sense.

Now consider a buyer.

The buyer signs an agreement with their agent establishing how the agent will be compensated. When the buyer finds a home, the purchase offer may ask the seller to cover all or part of that compensation.

A seller might agree because the overall offer is strong. Another seller might counter the request. Another may decline it entirely.

The decision becomes part of the overall negotiation, along with price, closing costs, contingencies, repairs, and other terms.

This is also why sellers should look at their estimated proceeds rather than commission alone. Grove Realty’s guide to closing costs for Riverside sellers explains some of the other expenses that can affect what a homeowner ultimately receives from a sale.

What to keep in mind

There is no single commission structure that is right for every transaction.

Before hiring an agent, ask what the compensation covers and what services are included. You should also understand whether there are additional brokerage or transaction fees.

Sellers should also discuss how requests for buyer-agent compensation will be handled if they come in with an offer.

For example, paying buyer-agent compensation may sometimes make financial sense if it helps attract a qualified buyer or results in stronger overall terms. In another situation, the seller may decide the offer does not justify the expense.

The important thing is to evaluate the offer as a whole rather than looking at one number by itself.

If you are interviewing Realtors, it is perfectly reasonable to ask about commission. It is also reasonable to ask about experience, marketing, communication, negotiation strategy, recent sales, and exactly what the agent will do to help you get the best possible result.

If you are selling in Riverside or elsewhere in Riverside County, Marni Jimenez can walk you through the compensation options and estimated selling costs before you decide how you would like to move forward.

One simple next step

Before signing a listing or buyer representation agreement, ask your Realtor to explain the compensation in plain language, including what you will pay, what services are included, and whether there are any additional fees. Understanding those numbers upfront makes it much easier to compare your options and make an informed decision.