Buyer agreements, since 2025
If you're buying a home in California, your agent will ask you to sign a written agreement early on. It's not a sales tactic. Since January 1, 2025, it's state law. Here's why, and what it has to say.
How we got here
Commissions have been negotiable for a long time. In 1950, the U.S. Supreme Court ruled that real estate boards fixing commission rates was illegal price fixing. California listing agreements for one to four units must say, in bold, that commissions are not set by law.
For decades, though, the usual setup was that the seller paid one total commission, and part of it was offered to the buyer's agent through the MLS. Home sellers in Missouri challenged that system, and in October 2023, a federal jury in Kansas City found against the National Association of Realtors and several large brokerages. N A R settled in 2024. On August 17, 2024, new rules took effect nationwide. Compensation offers to buyer's agents no longer appear on the MLS, and agents working with buyers need a written agreement with them.
What California's AB 2992 requires
California made the written agreement state law, starting January 1, 2025. A buyer representation agreement must:
- Be in writing, and signed as soon as practicable. No later than when you make an offer.
- State the agent's compensation, the services they'll provide, and when payment is due.
- Have an end date of no more than three months. Any renewal also has to be in writing, and is also limited to three months.
- Say that compensation is not set by law and is fully negotiable.
The three-month limit protects you. If the relationship isn't working, you aren't locked in for long.
Who pays the buyer's agent now?
It's negotiable, and there are several common outcomes. A seller may still agree to pay some or all of it, as a term in your offer. The buyer may pay part or all of it directly. Or it may be a mix. Your agreement says what your agent is owed. Your offer can ask the seller to cover it.
One rule hasn't changed: who pays an agent doesn't decide who the agent represents. A buyer's agent represents the buyer, even if the seller ends up paying them.
Questions to ask before you sign
- What exactly will you do for me, start to finish?
- How are you paid, and what happens if the seller won't contribute?
- When does the agreement end, and how can either of us end it early?
- Does it cover all homes, or only certain areas or properties?
A good agent welcomes these questions. It's the first conversation about how they'll earn your trust.
Want to talk it through? Send us a question.
This guide is general information, not legal advice. Sources include the California Department of Real Estate's guidance on AB 2992 and the 2024 N A R settlement practice changes.