How Your Real Estate Agent Gets Paid

What is a broker compensation advisory?

It explains how real estate agents may be paid. If you are buying, your agreement with your agent states the services the brokerage will provide, the compensation you agree to, when it is due, and how the agreement ends.

No California law sets a standard commission, required percentage, or minimum fee. You and your agent negotiate the compensation. A seller separately negotiates compensation with the seller’s agent.

If you are buying, get three answers in plain numbers

• What is the total compensation you are agreeing to, or exactly how will it be calculated?
• How much do you expect the seller, listing brokerage, or another source to pay toward it?
• What is the most you could personally owe if that outside payment is smaller than expected or is not available?

Who can actually pay your agent?

You may pay your buyer’s agent directly. You may ask the seller to pay an agreed amount through the purchase offer. Another authorized source may pay. Or the amount may be divided among more than one source.

A payment from someone else should be credited against what you agreed to pay. The fact that a seller pays your agent does not turn your agent into the seller’s agent. California law says the source of compensation does not by itself decide whom the broker represents.

Here is a simple example

Suppose your buyer-broker agreement says the brokerage will be paid $12,000. Your offer asks the seller to pay $10,000 toward that amount. If the seller accepts that term, the $10,000 is credited toward the agreed compensation. Your agreement determines whether you owe the remaining $2,000.

If the seller rejects the request or agrees to pay less, the fee does not simply disappear. Before you remain committed to the purchase, you need to know whether your agreement makes you responsible for the difference and how that amount affects the cash you need to close.

If you are selling, look at the complete offer—not one expense by itself

A buyer’s request for broker compensation is one term among the price, financing, closing date, contingencies, credits, and other terms. You may accept it, reject it, or counter it.

Compare your expected net proceeds from the complete offer. Refusing a buyer-side payment does not necessarily improve your final result dollar for dollar if the decision changes the buyer’s price, available cash, ability to close, or willingness to purchase the property.

California law and MLS rules are two different things

California requires a written buyer-broker representation agreement as soon as practicable and no later than the buyer signs an offer. Beginning January 1, 2026, a state regulation presumes that getting the agreement before an in-person or virtual showing is practicable, although that presumption can be rebutted by the circumstances.

The nationwide association settlement created separate rules for people covered by participating associations and multiple listing services. The Department of Real Estate enforces California law, not the private settlement. You should be told which rule applies instead of hearing the two described as though they are one rule.

What if you are using FHA or VA financing?

A seller can agree to pay buyer-broker compensation in an FHA or VA transaction. HUD says a reasonable and customary seller-paid buyer-broker fee is not treated as an FHA interested-party contribution merely because the seller pays it. VA’s temporary policy says a seller’s payment of the buyer-broker charge is not treated as a seller concession.

That does not guarantee that every price or payment structure will work. The property still has to support the purchase price, and the loan must satisfy appraisal and underwriting requirements. Ask the lender and settlement professionals to show you how the compensation affects this particular transaction.

Before you agree, ask your agent directly

• What services are you promising to provide me?
• What is the total compensation, and when would I owe it?
• If the seller pays nothing, what is the most I could personally owe?
• If another source pays part of it, will every dollar be credited to my obligation?
• How can either of us end this agreement?

Receipt