A homebuyer’s guide to navigating new real estate commission rules

The process of selling a home significantly changed on Aug. 17 when new real estate rules took effect as part of the National Association of Realtors’ court settlement over how broker commissions are negotiated. 

As part of the new regulations, buyers nationwide are now required to sign a written buyer-broker representation agreement after they have selected a real estate professional to represent them. In California, this industry directive was recently cemented into state law. On Sept. 24,  Gov. Gavin Newsom signed into law Assembly Bill 2992, which will require written agreements between agents and homebuyers, starting Jan. 1, 2025. The new law also mandates that written agreements end automatically after three months, unless both sides agree in writing to extend it.  

In light of these new rules, the association has created a resource guide to help homebuyers understand the new process now in place under the settlement agreement. (Details about California’s new state law can be found here.)

Here’s what you need to know about negotiating an agreement with a real estate agent:

When will I be able to negotiate? 

Written buyer agreements are required for many real estate professionals before you tour a home with them, either in person or via a live virtual tour. These agreements help ensure both you and your agent are clear about the agent’s role, responsibilities and compensation. If you are simply visiting an open house on your own or asking a real estate professional about their services, you do not need to sign a written buyer agreement. 

Learn more about written buyer agreements here and more about open houses and tours here. 

What can I negotiate? 

Agreements with your agent are negotiable, including terms about the services your agent will provide, how much your agent will be paid, how long your agreement will last and more. You and your agent will work together to reach an acceptable agreement that allows you to get the value and services you need in the homebuying process, while also enabling your agent to pursue fair compensation for their work. Compensation is fully negotiable and not set by law. You should consult an attorney if you have any questions or concerns regarding an agreement. 

How is my agent compensated? 

Agent compensation can take many forms, such as a flat fee, a percentage of the purchase price or an hourly fee. Agents cannot agree to an open-ended amount or range of compensation, such as “the agent’s compensation will be whatever amount the seller is offering” or  the agent will be paid “between X and Y percent.” The terms and amount must be clear in the agreement. You also can ask the seller to offer compensation to your agent, which can be sought in the purchase agreement. 

Find more information on offers and compensation here. 

What types of services can my agent provide?

Agents may offer many types of services, such as finding and showing you homes that meet your criteria, accompanying you to showings, sharing their analysis of available properties, negotiating on your behalf and more. 

Learn more about Realtor services here.

How do I start the conversation? 

You may want to talk to a few agents to find the best match to help you on your homebuying journey. Start by asking questions about the options available to you. If you are working with a Realtor – a licensed real estate agent who is a member of the National Association of Realtors –  they are bound by a Code of Ethics to have open and transparent conversations with you about your options. 

Read more about a Realtor’s duty to put client interests above their own here. 

What if we can’t agree? 

You don’t have to sign an agreement if you don’t like its terms. You or the agent can walk away from a negotiation at any time. Keep looking for the right fit – another agent may be able to better meet your needs. 

Can we change the terms of the agreement after we make it? 

Yes. You and your agent can mutually agree to change the terms of your agreement, but your agreement or state law may govern when it can be changed or terminated. Read your agreement closely and speak with your agent if you would like to change or exit your agreement. Practices may vary based on state and local law. Consult your real estate professional or  an attorney for details about state laws where you are purchasing a home. 

For more information and resources related to the settlement agreement, go to facts.realtor.

Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.