Should Sellers Pay Buyer’s Agent Commission in California?

California real estate is not for the faint of heart. 

Within a sea of in-demand neighborhoods in cities like Los Angeles and San Francisco, demand for some of the best places to live on the West Coast creates a competitive market in California. Coming out on top in a successful home sale while navigating the fine print of real estate transactions isn’t as breezy as the postcard images of surfboards, Teslas, and arts scene that the Golden State is famous for.

One of the trickiest hurdles for sellers? Deciding whether to pay a buyer’s agent commission. 

This decision can impact everything from the profit on your sale to how quickly your home sells. Changes to industry norms and legal settlements by the National Association of Realtors (NAR) have shaken up traditional practices, making the answer more complex.

So, should sellers in California continue offering to pay a buyer’s agent commission? Or is it time to rethink this decades-old tradition? Below, we’ll explain what this means for you and your bottom line.

What is a buyer’s agent commission?

The buyer’s agent commission is the fee paid to the agent representing the buyer for helping them find their dream home, navigate the purchasing process, and ensure all the i’s are dotted and t’s are crossed. This fee historically hovered between 2% to 3% of the home’s final sale price in California.

Traditionally, the seller has shouldered this cost, bundling it with the commission paid to their own agent, often resulting in a total commission rate of 5% to 6% inclusive of the commission provided to the cooperating buyer’s agent.

So, why does this fee exist? It’s all about sellers incentivizing buyer’s agents to show your property and ensuring buyers receive expert representation. However, as home prices climb and market dynamics shift, the conversation around who should pay is becoming louder—and more complex.

Should sellers pay the buyer’s agent commission?

The answer? It depends. Paying the buyer’s agent commission can make your property more appealing, especially to first-time buyers or those already stretched thin by down payments and closing costs. A well-priced home in California with a seller-paid buyer’s agent commission can attract more interest, potentially leading to faster offers and a smoother sale.

On the other hand, some sellers are choosing not to cover the cost for buyers, arguing that it’s fair for buyers to pay for their own representation. While this can save sellers thousands, it may also reduce the pool of interested buyers, particularly in markets where buyers already face affordability challenges.

Ultimately, the decision comes down to your priorities as a seller. Are you focused on maximizing your profit, or is a quick and seamless sale your top goal? Weighing these factors—and consulting with your agent—will help you make the right call for your home and your local market.

How can sellers pay the buyer’s agent commission?

Unlike certain closing costs, this fee is entirely negotiable between the buyer, seller, and their agents, allowing room to find an arrangement that works for everyone for each transaction.

Historically, sellers offer to pay the entire buyer’s agent commission as part of the deal. Why? Because covering this cost can make their home far more attractive to potential buyers. Picture this: a buyer juggles a down payment, closing costs, and moving expenses. By offering to pay their agent’s commission, you’re lifting a significant, out-of-pocket financial burden that can't be rolled into the buyer's mortgage, making it easier for them to say, "Yes, let’s do this." 

But if covering the full commission requested by a buyer’s agent doesn’t align with your budget or goals as a seller, there are other ways to strike a deal. Sellers can offer to split the cost, agreeing to pay a portion of the commission while the buyer picks up the rest. This compromise allows you to keep some cash in your pocket without completely removing the incentive for buyer’s agents to show your property. It’s a middle-ground solution that can help you appeal to buyers while protecting your bottom line.

Alternatively, sellers can negotiate commission terms directly with their listing agent before selling the home. Some agents may suggest offering a reduced commission rate to the buyer’s agent, a cost-saving strategy if the home is in a highly desirable area where demand is strong. 

However, it’s essential to strike the right balance—offering too little could deter agents from showing your property, which may ultimately hurt your chances of a quick sale.

Tips for sellers negotiating buyer’s agent commissions

Negotiation is key if you’re open to paying the buyer’s agent commission but want to minimize costs. Start by discussing options with your listing agent—they can often provide insights into what’s reasonable in your market and help craft a strategy that aligns with your goals.

Highlight the strengths of your property. A well-maintained home in a desirable location gives you leverage to request lower commission rates. Additionally, consider bundling other concessions—like covering a set dollar amount of the buyer’s closing costs—instead of a specific buyer’s agent commission percentage.

Remember, negotiation is a two-way street. Be prepared to compromise and focus on creating a win-win situation that keeps both parties motivated to close the deal. A little give-and-take can go a long way in ensuring a successful sale.

Alternatives to sellers paying a buyer’s agent commission

For sellers looking to skip the tradition, there are alternatives to consider. One option is to list your property "For Sale By Owner" (FSBO), which allows you to potentially bypass paying commission altogether. But be prepared to take on all the responsibilities of marketing, showing, and negotiating yourself.

Another route is to work with a flat-fee MLS service. These platforms allow you to pay a set fee to list your property on the Multiple Listing Service (MLS), giving your home visibility without the hefty commission fees. Just keep in mind that you’ll still need to handle the sale’s finer details.

Finally, some sellers explicitly state from the start that buyers are responsible for their agent’s commission. While this can save you money, it may limit budget-constrained buyers. It’s a calculated decision that requires careful consideration and a solid understanding of your local market.