Who Pays Your Agent Now, and Why It's a Conversation Worth Having

It's been about two years since the way buyer's agents get paid in this business changed, and I still have the same conversation nearly every week. A buyer sits down with me, we get to the part about representation, and I can watch it land. They thought this part was already settled. They assumed the seller pays for everything, because that's how it worked when they bought their last house, or how it worked when their parents bought theirs.

That assumption was reasonable for a long time. It simply isn't how it works now, and a great many buyers are still operating on it.

I'm going to walk through what changed, what you sign, what goes in the offer, and what I'd ask before putting my name on anything. I'll be careful with the specifics, for two reasons. Compensation is a subject the California Department of Real Estate expects us to describe precisely. And the particulars of any one arrangement belong in a written agreement, in front of you, with your questions answered, not on a web page.

What changed in August of 2024

A nationwide legal settlement involving the National Association of Realtors changed two long-standing practices, and those changes took effect in August of 2024. They came in through the rules of the multiple listing service, which is the system agents use to share properties with one another, so they reached essentially every transaction in the state.

Two things are different now:

• Offers of compensation to a buyer's agent are no longer published in the multiple listing service. That figure used to sit right there in the listing data alongside the square footage. It isn't there anymore.
• A buyer signs a written representation agreement with their own agent before touring homes. Not after you find something. Before you see the first house.

Both changes point the same direction. Who pays your agent is now something you decide on purpose, in writing, instead of something that gets assumed on your behalf.

Why the question almost never came up before

Under the old way, it was broadly assumed the seller would pay the buyer's agent. Because the offer of compensation was published in the listing, that assumption held up most of the time without anybody having to discuss it. An agent pulled up a property, read the number off the screen, said hallelujah, and that was that. Most buyers never saw that part of the transaction at all.

That's the piece I'd like you to sit with for a second. It wasn't that buyers were told the seller pays. It's that the question rarely surfaced. And a question that never surfaces is a question you never got to answer for yourself.

It's been my experience that people are far more comfortable with a fee they discussed than with a fee that was handled quietly for them, even when the arrangement ends up looking similar either way.

The agreement you sign with your own agent

Before an agent shows you homes, the two of you sign a written buyer representation agreement. In California, most agents use a form published by the California Association of Realtors. That document does two jobs: it spells out what the agent is agreeing to do for you, and it spells out how that agent's brokerage is compensated.

Since I first wrote about this, California has put its own law behind it, and that is worth knowing because it is stronger than an industry rule. Civil Code section 1670.50, effective 1 January 2025, requires a buyer-broker representation agreement as soon as practicable, and no later than when you sign your offer.¹ A regulation that took effect 1 January 2026 goes further, adding a presumption that it was practicable to get that agreement signed before your agent showed you a property, in person or virtually.² That presumption can be rebutted, so it is not an absolute bar, but the direction is unmistakable.

The distinction matters. The August 2024 changes came through multiple listing service rules, which bind the agents and brokers who participate in those services. What California has since added is statute and regulation, which is a different kind of authority. If someone tells you the paperwork is just an industry formality, that is no longer an accurate description of California.

The second part is the one people skim. It's the one I'd read twice.

Under California rules, compensation is fully negotiable between you and your agent. It is not set by law. It is not set by any board or association. There is no standard rate, and nobody is permitted to tell you there is. Whatever ends up written in that document got there because the two of you sat down and agreed to it.

I'm not going to characterize what any particular arrangement looks like, mine included. That conversation happens with a document on the table and your questions answered out loud.

The offer is a separate document, and a separate negotiation

Here's the distinction that trips people up, so let me be plain about it. Your agreement with your agent and your offer to the seller are two different documents doing two different jobs.

The representation agreement is between you and your broker. It is where compensation is agreed.

The written purchase offer is between you and the seller. It is where you can ask the seller to contribute toward your agent's compensation, the same way you'd ask for any other term. The seller can agree, refuse, or counter. That's how offers work, and a seller reads your offer as one package: the price, the timeline, the contingencies, and anything you've asked them to contribute.

So the two documents talk to each other, but they are not the same conversation, and the second one does not erase the first. What you agreed to with your own broker doesn't evaporate because a seller declines. That's precisely why one of the questions further down matters as much as it does.

The shapes a deal can take

Everything in real estate is negotiable, and that includes this. Under the contract there are a few basic ways it can be structured. I'm going to lay them out flat, without a recommendation, because the right answer depends entirely on your situation and the decision is genuinely yours.

You pay your agent directly. The compensation agreed in your representation agreement is paid by you, generally at closing. Nothing about it waits on the seller agreeing to anything. It's also money you bring to the table, so it belongs in the same planning conversation as your down payment and your closing costs.

Your offer asks the seller to contribute. The request goes into the written offer as a term of the contract. The seller can accept it, decline it, or counter, and it sits next to your price and your other terms in how they weigh the offer. Ask your loan officer how your specific loan program treats a seller contribution toward buyer-agent compensation, because the program rules around contributions have been evolving since the change and they are not identical across every loan type.

Some combination, which can include an adjustment to the purchase price. Buyers and sellers sometimes negotiate a price that accounts for what the seller is contributing. That carries consequences worth understanding before you agree to it. A higher purchase price is a higher number the appraisal has to support. It changes the amount you finance, and in California your purchase price is what sets your assessed value for property taxes going forward.

None of these is the correct one. Each is legitimate, each has consequences, and you're the one who chooses. That last part is the part I actually like about the current rules.

Why I think this is fairer, even though it took getting used to

I'll be honest with you. The industry did not love this at first. Agents were accustomed to seeing compensation published in the listing and reading it off the screen. Buyers were accustomed to not thinking about it at all. For a stretch it felt like more paperwork stacked onto a process that already has plenty of paperwork.

I've come around, and not reluctantly. I like it. It's a more level playing field, and it's more transparent, because nothing consequential is being assumed on anybody's behalf.

A home purchase is one of the largest financial commitments a person ever takes on. In a transaction that size, nobody should simply assume who is paying whom. You should know, in writing, before you tour the first house. That isn't extra paperwork. That's the buyer finally being in the room for a conversation that used to happen without them.

Four things to do before you sign the representation agreement

Read it. All of it, right there, and don't apologize for taking the time. If somebody is in a hurry while you're reading a contract, that itself is information.

Ask what it commits you to, and for how long. Term length, geographic scope, and how it can be cancelled. Ask whether it obligates you on a property you found on your own, and what happens if you buy after it expires from someone you met while it was in force.

Ask how compensation would be handled if the seller declines to contribute. This is the question most buyers don't think to ask, and it's the most important one here. Get that answer before you sign, not after your offer comes back countered.

Negotiate. The terms of this agreement are negotiable like everything else, so ask for what you want. Any professional worth hiring will not be offended by the question.

I'll say this the way I mean it: this is your transaction and these people work for you. Be cordial, be professional, and then ask every single question you have. Nothing you're wondering about is too small to say out loud, and this is a poor moment to be shy.