What’s a Buyer Broker Agreement in California?

FAQ about buyer broker agreements in California

Do I need to sign an agreement just to attend an open house?
No, most buyer-broker agreements only apply to private home showings with your agent. Open house events are typically open to the public. Unless this is specifically addressed in your contract, you should be able to attend without signing a broker agreement. However, open house guidelines from local Realtor associations are evolving and can vary by region or brokerage. Proceed with informed caution. If you already signed an exclusive contract with a buyer’s agent, and you attend an open house and ultimately decide to buy the home, you may be required to pay your agent, even if they did not find the open house property.

Are all buyer-broker agreements the same?
No, these agreements can vary between agents and brokerages. Also, depending on what you negotiate with your agent, your agreement may have unique terms. For example, one agreement might be for a single day or weekend of touring properties, while another might be written as a multi-month contract. Review the terms of your buyer-broker agreement carefully and ask questions before making a commitment.

What red flags might I look for in a buyer-broker agreement?
When considering a buyer-broker agreement, watch out for:

• Long durations that lock you in for an extended period
• Non-negotiable commission rates
• Vague or obscure cancellation terms
• Excessive or unrealistic penalties for terminating the agreement

Why have real estate buyer-broker agreements changed?
The NAR rule changes were implemented to promote more transparency and make certain homebuyers understand their new responsibility for negotiating and paying their own Realtor fees. The goal is to reduce confusion during home sale transactions.

Do the new rules control how much commission I have to pay?
No, the new NAR rules do not dictate commission amounts. This was true with buyer-broker agreements even before the NAR settlement agreement. Realtor fees have always been negotiable.

What amount of Realtor fees can I expect to pay as a homebuyer?
As noted above, you can negotiate with your agent to determine how much you pay in commissions. A recent HomeLight survey found that a typical buyer commission cost range falls between 2.5% and 3%. However, you can also seek out discount commission agents or brokerages. You may also be able to negotiate a lower rate for a less complicated transaction, such as a property sale between two family members. Below is a table showing examples of various commission percentages on a typical $800,000 California home purchase.

Commission examples on $800,000 California home

Bottom line: Buyer-broker agreements in California

The new buyer-broker agreement requirement in California is part of a nationwide effort to increase transparency in real estate transactions. While it may feel like an added burden in the home-shopping process, the agreement can empower buyers by clarifying responsibilities. The contract also helps buyers know what to expect and provides more control over financial arrangements.

As you look for an agent, remember that reputable Realtors dedicate significant time and effort to helping their clients, especially in competitive California markets. A skilled agent will be well worth their compensation. At the same time, agents also recognize that they need to earn your trust and your business. With this in mind, most seasoned California agents are offering flexible ways to comply with the new NAR settlement rules.

If you’re buying a home in California, take the time to understand the agreement and discuss it with your agent. If you’re concerned about the additional expense of paying your buyer agent’s commission, ask your agent if they can negotiate this expense with the home seller. But keep in mind that this may put your offer at a disadvantage in a competitive market.

Looking for an expert agent you can trust? HomeLight can connect you with performance-proven buyer’s agents in your California market. We analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs. If your goal is to buy before you sell in California, visit this link for HomeLight’s modern solution. Watch this short video to learn more.

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