New Real Estate Guidelines: Buyer Agreements and Commission Updates
Real estate got a transparency upgrade in 2024: Both buyers and sellers now need written agreements with their agents, and buyer commission rates are negotiated upfront. Whether sellers cover buyer agent fees is decided with each purchase offer.
From Informal to Informed Formality: How 2024 Changed the Buyer-Agent Relationship
In 2024, the real estate industry replaced largely informal buyer-agent interactions with a structured system requiring written buyer representation agreements early in the process—at least before any offers are made.
Standardized agreements, developed by various REALTOR® associations, include fill-in-the-blank sections tailored to individual transactions and must be signed before agents can show properties to buyers in-person or virtually. Increasing commission rates after the agreement is signed is disfavored, if not outright prohibited. Thus, a buyer broker representation agreement must define:
- Representation Type: Specifies whether the relationship is exclusive or non-exclusive.
- Buyer Responsibility for Agent Compensation: Formally assigns responsibility for buyer agent fees to the buyer (who can negotiate with sellers to cover these fees as part of the offer process).
- Commission Structure: Sets the commission rate and specifies permissible compensation sources.
- Expectations: Clarifies roles, responsibilities, and terms of engagement.
- Duration: Limits the agreement to renewable 90-day terms.
Previously, buyer-agent relationships were often fluid, casual, and informal, leaving room for ambiguity and miscommunication. Department of Justice anti-competition efforts, combined with various class action cases, drove the shift to this new system. The written agreements establish clearer expectations and encourage buyers to make more deliberate choices when selecting an agent.
But Has Anything Really Changed?
A closer look reveals that, even before the shift, buyers were effectively the source of funds for buyer-side commissions. Commissions paid from sale proceeds ultimately came from buyers and their lenders. While the mandatory agreements have added transparency, formality, and additional paperwork, the practical aspects of compensation remain largely the same, with the underlying dynamics of agent compensation continuing as before.
LATE 2024 UPDATE
Between the announcement of the settlements with the National Association of REALTORS® and its state and local affiliates in May 2024 and their implementation in August, there was a palpable sense of unease across the industry. The shift to requiring upfront written agreements between buyers and brokers, along with the prospect of buyers being fully responsible for their agents’ fees if sellers refused concessions, had many bracing for major upheaval.
Yet, in the months since these changes rolled out, things in practice haven’t shifted as dramatically as feared. A leading national title company we work with regularly reports that more than 90% of sellers are still agreeing to pay buyer broker fees via escrow concessions. In the Bay Area, that number climbs to 94%. The fact that it’s not closer to 100% shows the changes are having their intended effect—requiring buyers, sellers, and agents to openly discuss and agree on compensation as part of the home-buying process.
IN SUM
Big Picture:
Nothing is a Given Anymore.
Autopay is Out.
Written agreements between buyers and their agents, like a listing agreement between agents and sellers, will control. By default, buyers now have the ultimate responsibility to pay their agents.
The Bigger Picture, Pt. 1
Negotiation is In.
Just as each property is unique (even in big buildings and tract developments), so are the circumstances for each deal — including how the buyer agents are paid. We will negotiate our fees for you if at all possible and demonstrate our value along the way to all parties involved.
The Bigger Picture, Pt. 2
More Transparency.
One of the reasons for the change was to make things clearer and to give buyers and sellers more things to negotiate. But with home values moving ever higher, it’s never been clearer that having professional representation on all sides is essential for success.
The Written Buyer Agreement Requirement is Broad in California
All real estate agents require a written agreement before engagement, ensuring clarity and transparency in transactions.
This was true on the seller side for years, but less so on the buyer side.
But recent changes following a landmark settlement mean buyers must negotiate agent fees with their own agent and take responsibility for these costs, with the option to request seller concessions. But remember, this only applies if you actually buy and close a home.
These reforms aim to foster fairer and more transparent commission negotiations, fundamentally transforming the real estate landscape.
Importantly, starting in 2025, the written buyer representation agreement requirement applies to all real estate agents in California — not just REALTORS — who are assisting residential property buyers, although REALTORS must prepare the agreement before touring a property in-person or virtually whereas a regular ’ol agent can prepare the agreement as soon as practicable.
A Form For Us and You
(only when you’re ready)
Just as doctors, mechanics, dog groomers, and many other professional services require a written agreement before they can begin their work, all real estate agents will now follow suit.
Historically, only sellers’ agents (listing agents) were required to have such agreements. But now, moving forward, all real estate agents will need to have a written agreement in place before engaging in any transactions. Why don’t we examine one then, shall we?
Here’s a sample buyer representation agreement that outlines the general framework of how agents and buyers are supposed to work together.
This is the California general form, but you’ll likely encounter similar ones from brokerages, regional realtor groups, and platforms like Zillow. While these agreements and practices may feel new at first, they are designed to be tailored to each set of clients, agents, and properties. The market will adapt, and a new convention will emerge. In the meantime, take a look—we’ve highlighted relevant passages for you to consider.
ON THE GROUND
What to Expect
Open House Bouncers
(or just a sign-in sheet)
Like a Bouncer, agents may start checking if you have Buyer Representation paperwork in place or making you sign-in at at open houses. We will set you up with the paperwork but if we haven’t, be sure you mention us to anyone who asks.
Commitment Phobia
(Sign only when you’re ready)
Don’t let anyone pressure you into an exclusive buyer representation agreement early on (including us). This is an important decision and we want you to feel 100 percent comfortable that you have the best support, counsel and expertise around backing you. So we don’t blame you if you want to shop around, which is why you may see short-term, non-exclusive agreements out there.
Commitment Phobia: No Numbers Please
Part 2
No specific percentages or amounts of potential compensation can be offered. Even if a seller agent says a seller is (or is not) willing to consider offers with concession, you cannot rely on that.
Concession Friendly or Agnostic?
(Even if a Seller says no concessions on the MLS, we can (and will) still ask)
Listing agents can now only indicate a seller’s ‘willingness’ to consider offers with concessions on the MLS in a general yes/no format without specifying details. The actual terms will be negotiated later. This approach aligns with the rule that prevents any specific amounts from being published on the MLS. Additionally, the listing agreement won’t include a space for a buyer agent fee, as it doesn’t exist yet and is only an abstract concept until an offer is made—it’s kind of a causality type of thing.
VALUE ADDED
But, Are Agents Worth it?
In a nutshell: Yes.
And in the case of excellent, experienced and enthusiastic ones? Most definitely.
How Kevin+Jonathan Add Value for their Buyers
(aka, Why so many want to work with Kevin+Jonathan)
It’s challenging to encapsulate everything we do for our clients in just a few words because our service encompasses so much more. Our website, the testimonials you’ll see here and elsewhere, and our extensive years of experience speak volumes about our commitment and the results we consistently deliver.
We are your hired swords, keeping a level head throughout the process while diving deep into properties—exploring disclosures, dynamics, and decision factors on your behalf. Think of us as your walking Wikipedia, an encyclopedia of knowledge about the target property and neighborhood. When our knowledge is limited, we become your Rolodex of trusted experts, connecting you with those who know. We are your counselors, your cheerleaders, and your steadfast professionals
“Kevin and Jonathan are a fantastic team. I found them via Yelp and, for once, the superlative reviews were accurate.”
“Step by step they guided us through the process and advised us on how best to proceed. Most of all their encouragement is probably what kept us in the game that otherwise I thought we could not have won.”
“Thank you for bringing decency to an otherwise shoddy industry.”
“It’s hard to describe how good of an experience it was to work with Kevin and Jonathan — they’ve completely changed our opinion of how great real estate can be.”
“We had a wonderful experience working with Kevin, Jonathan, and Raffi. We have and will continue to recommend them to anyone who is looking to buy or sell a home in the Bay area. We were first-time buyers and because of their expertise and support, we’re able to get our dream first home!”
“If I could give more stars I would.”
“Having Kevin and Jonathan as guides through the SF real estate market is a true win. Their expertise and knowledge in navigating housing and neighborhood options, complex processes and paperwork is bar none.”
“They are so positive, energetic and fun, that the whole experience working with them is a joy! ”
SOME CONTEXT
Why Sellers Should Pay Buyer Agent Fees...
Why It is a Good Idea for Sellers to Pay Buyer Agent Fees
Because the commission structure is no longer set that buyer agents get paid automatically by the seller proceeds (which was usually comprised of the buyers cash combined with lenders’ cash).
Now the amount it must be part of an offer that in backed by a written buyer agreement and any property listed on the MLS will require such an agreement to be in place before buyers can be shown a property.
Comparative Advantage of Having Competent, Skilled, and Ethical Agents on All Sides
When sellers refuse to cover the buyer agent’s commission, buyers are required to pay their agents directly with their own cash or will be required to adjust their offer accordingly. This obligation is clearly outlined in the buyer representation agreement, which must be in effect when offers are submitted.
And while there are times when a buyer will self-pay their own agents like wanting to keep the purchase price down for future property tax assessments or if bidding really is competitive (perhaps a probate sale), there are so many more times where having previous practice of seller-paid for buyer agent costs proves the smarter decision.
All eyes are waiting to see how the changes to the system will be interpreted by lenders as the main challenge facing buyers is that lenders, as a whole, will not finance the cost they have been financing for years now indirectly. There are signs that this may change as VA loans will cover buyer agent fees, which may be a harbinger of things to come.
Rationale for Sellers to Pay Buyer Agent Commission (as a Pass-Through):
The Multiplier Effect: Instead of having buyers deplete their cash reserves to pay agents, sellers can allow buyers to leverage their cash alongside lender funds to offer more for the property. This not only maximizes the buyer’s purchasing power but also can lead to a higher sale price for the seller.
Peace of Mind: Engaging experienced, expert, and ethical agents benefits everyone involved in the transaction. It’s only logical to have the best professionals guiding you through one of life’s most significant financial decisions. We handle the technical details, jargon, and protocols with a deep understanding of managing timelines to ensure the sale closes smoothly and without unnecessary complications.
Managing Risk: Having skilled agents involved in a sale dramatically reduces the risk of issues arising post-close. Professional representation helps mitigate potential problems and ensures that the transaction proceeds as smoothly as possible, protecting all parties involved.
How did we get here?
It all started with a checkbox instead of a line
The New York Times tracked down the Missouri buyers who first filed one of many lawsuits that caused the national changes to what can appear on the various MLS databases across the country and who bears the responsibility of paying the buyer agent in each transaction. For them, according to the article, the offending trespass was that the standardized listing agreement their local realtors used only had checkboxes for how much they would pay the buyer’s agent (who was only an abstraction when they signed their listing agreement). There was no choice in the matter. No opportunity for them to decide something different. If that form had only done what California had done with its old form — having a blank line where you can write in a number or arrangement — we may have avoided all the upheaval.