Seller Guide
What actually changed after the NAR settlement, what did not, and how to think about paying a buyer's broker as a marketing decision rather than an obligation.
For most of the modern history of the American housing market, a seller in Los Angeles hired a listing broker at a negotiated fee, and that broker published an offer of compensation to any broker who produced a buyer. The seller usually never saw the second number as a separate decision. It was quoted as one figure, split behind the scenes, and disclosed in the closing statement. That structure ended, formally, on 17 August 2024, when the practice changes flowing from the National Association of Realtors settlement took effect. What replaced it is not simpler, but it is more honest, and it puts a decision back in the seller's hands.
The change is narrower than the coverage suggested, and understanding the boundary matters. Offers of compensation to buyer brokers can no longer be published on a multiple listing service. That is a rule about a publication channel. It is not a prohibition on sellers paying buyer brokers, which remains entirely lawful and remains common. Compensation was always negotiable, and in California a statute has required listing agreements to say so for years. What has genuinely shifted is that the buyer's side now negotiates its own fee with its own client in writing, and any seller contribution toward it is a term of the deal rather than a standing advertised offer.
This guide sets out what changed, what did not, how the pieces now connect, and how a Los Angeles seller should actually decide what to do about buyer-side compensation. It draws on the National Association of Realtors' own settlement materials, the California Department of Real Estate's consumer guidance, and trade reporting on what has happened to rates since. It is not legal, tax or financial advice, and it does not tell you what to pay. That is a commercial judgement about your property, your buyer pool and your timing, and it should be made with your broker and, where the sums warrant it, your lawyer.
Two operative changes took effect. The first is that offers of compensation to buyer brokers may no longer be published on a multiple listing service. Every MLS subject to the settlement removed the compensation field, and listings can no longer advertise what a cooperating broker will be paid. The second is that MLS participants working with buyers must enter into a written agreement with the buyer before touring a home, with the compensation stated in a way the National Association of Realtors describes as objectively ascertainable and not open-ended, and capped at what that agreement provides regardless of the source of payment.
The consequence for a seller is a change of sequence rather than of substance. Under the old structure, the seller's offer to the buyer's broker was set at listing and broadcast to the market. Under the current structure, the buyer has already agreed with their own broker what that broker will be paid, and the question presented to the seller is whether, and how much, the seller will contribute toward it. That question can be raised in the offer, negotiated in the counter, or addressed in advance through a compensation agreement between the two brokerages. It is now a negotiated term of a specific transaction.
It is worth being precise about what the settlement did not do. It did not set, cap or reduce any commission rate. It did not prohibit sellers from paying buyer brokers. It did not prohibit a listing broker from communicating a seller's willingness to contribute through channels other than the MLS. And it did not change California agency law, disclosure law or the requirement that compensation be documented in writing. Most of the confusion in the market since 2024 has come from treating a rule about one publication channel as though it were a rule about compensation itself.
California has required this to be stated on the face of the paperwork for a long time. Business and Professions Code section 10147.5 requires an agreement establishing compensation to a licensee, in the sale of residential property of four units or fewer or a mobilehome, to include a notice in at least ten-point boldface type immediately preceding the compensation provision, stating that the amount or rate of real estate commissions is not fixed by law, that they are set by each broker individually, and that they may be negotiable between the seller and the broker. The statute also prohibits pre-printing commission figures on the form.
The Department of Real Estate has been direct with consumers about this. In a consumer alert published in December 2024 addressing the changes to real estate representation, the department told consumers to reject claims of standard rates, stated plainly that commissions are fully negotiable under California law, and set out warning signs including vague fees, pressure to sign quickly, undisclosed dual representation and verbal promises that never appear in writing. That is a regulator telling the public that the number in front of them is a proposal, not a tariff.
Negotiable is not the same as interchangeable, and this is where sellers at the top of the Los Angeles market sometimes reason badly. The fee buys a specific package of work: pricing judgement on a property with few comparables, a marketing budget that is genuinely spent, access to the buyers who actually transact in that band, and someone who will hold a negotiation together when a deal wobbles. The right question is not who is cheapest but what each proposal actually contains, what it will cost to deliver, and what the difference in outcome is likely to be on your particular asset.
California did not simply inherit the settlement's requirements. Assembly Bill 2992 took effect on 1 January 2025 and requires a written agreement between a buyer's agent and a buyer, executed as soon as practicable and no later than the execution of the buyer's offer to purchase. The Department of Real Estate has explained that the initial agreement and any renewal cannot exceed three months from the date the agreement was made, except where the buyer is a corporation or limited liability company, and it adopted regulations defining three months as ninety calendar days beginning the day after the last party signs.
Those regulations fill in the practical edges. Showing a property, in person or virtually, is treated as the triggering event at which entering an agreement becomes practicable. Renewals require affirmative written action by both parties rather than automatic rollover. And a seller's agent holding an open house does not need to obtain buyer representation agreements from unrepresented visitors who walk through the door. Failure to comply is treated as a violation of the licensing law, exposing the licensee to discipline by the Department of Real Estate. The cumulative effect is that a represented buyer arrives at your house having already made a written commitment about what their side of the transaction will cost, on a document you never see.
For a seller, the significance is indirect but real. Every represented buyer who tours your house has already committed, in writing, to pay their broker a defined amount. If you contribute nothing, that buyer must fund the fee from cash that would otherwise have gone into the purchase price or their closing costs, and financing rules limit how much of it can be absorbed. That does not mean you must contribute. It means the buyer's fee is a real number sitting inside every offer you receive, and pretending it is not there does not make it disappear.
The useful reframing is that a contribution to the buyer's side is no longer an obligation and is not a matter of etiquette. It is a marketing expenditure, evaluated the same way you would evaluate staging, a price adjustment or an extended marketing period: does it produce a better net result. In some situations the answer is clearly yes. Where the buyer pool is broad and price-sensitive, where competing listings are contributing and yours is not, or where a buyer's ability to complete depends on preserving cash, a contribution can widen the field of people able to transact.
In other situations the answer is genuinely no. At the top of the Los Angeles market, buyers are frequently paying cash, are advised by people whose fees they are perfectly capable of paying, and are not constrained by loan-to-value ratios or closing-cost limits. A seller of a trophy property who declines to advertise any contribution and instead negotiates it deal by deal loses very little, because the buyers who matter are not filtering on that basis. The variable is the buyer pool, not a principle. The test is empirical: look at what has actually been agreed on recent comparable sales in your band and in your neighbourhood, and ask your broker to tell you what buyers there are actually doing rather than what the market did in 2023.
There is a middle path that most experienced listing brokers now use, which is to decide the position without publishing it. You may authorise your broker to negotiate compensation with a buyer's broker without committing to a figure in advance, and to respond to it when an offer arrives. You may also make a contribution conditional, tying it to price, terms or timing. What you should not do is leave the question unaddressed in your listing agreement, because the authority your broker has to negotiate on your behalf comes from that document.
A seller concession is a credit from the seller to the buyer, applied at closing, which the buyer may use for closing costs, loan costs, prepaid items, rate buydowns or, in the current environment, their own broker's fee. It is a different instrument from compensation paid by a seller directly to a cooperating brokerage, and the distinction matters because the two are treated differently by lenders, by the closing statement and sometimes by the paperwork. NAR has confirmed that multiple listing services may carry seller concession fields, expressed as totals or percentages, and that concessions communicated on an MLS are not binding on the seller.
The lender constraints are the practical limit. Financed buyers face caps on interested-party contributions that vary by loan programme, occupancy and down payment, and a concession that exceeds the applicable cap is simply disallowed. There are also appraisal implications: a large concession stacked on top of a headline price can affect how the transaction is read by an appraiser and by the market that later uses it as a comparable. These are questions for the buyer's lender and for your escrow officer, and they should be answered before a structure is agreed rather than during the final week.
Sellers should also understand the optics. A concession preserves the recorded sale price while reducing the seller's net, which some sellers prefer for reasons connected to comparable sales in their building or street. That is legitimate, provided everything is disclosed properly to the lender and reflected accurately in the settlement documents. Concealing a credit in order to protect a headline number is not a grey area of practice; it is mortgage fraud, and no reputable brokerage or escrow company in Los Angeles will participate in it. If a structure only works because someone will not see it, that is the answer to whether it should be used.
The honest answer, nearly two years on, is less than most predictions. Inman reported in March 2026 on survey work by Cotality and ResiClub covering February and March 2026, in which roughly two-thirds of responding agents said they had seen no significant change in commissions since the 2024 settlement, alongside Redfin transaction data showing buyer's agent commissions moving from 2.36 per cent in the third quarter of 2024 to 2.42 per cent in the third quarter of 2025. ResiClub's Lance Lambert described the honest economic observation as stickiness rather than the earth-shattering shift that had been predicted.
Those are national figures drawn from national data sets, and they should be read with care in a Los Angeles context. The upper end of this market has always been more variable than any national average suggests, and the fee structures on eight-figure properties have never resembled the ones reflected in a survey of general practitioners. Treat published averages as evidence that the market did not collapse into a new standard, rather than as a benchmark for your own negotiation. A national survey of general practitioners tells you very little about what is being agreed on a hillside estate with nine plausible buyers worldwide, and using it as a reference point in either direction is a mistake.
The same reporting identified buyer-side compensation as the area of greatest friction, with about a third of surveyed agents naming it as the main pressure point, even as sellers have grown more willing to contribute. That is a fair description of the current equilibrium. The old default disappeared, no new default has replaced it, and each transaction now negotiates the question on its own facts. For a seller, that is an argument for deciding your position deliberately in advance rather than being asked to improvise it when the first offer arrives.
Start by separating the two numbers in your own mind and in your paperwork. The first is what you agree to pay the brokerage representing you, which is what your listing agreement is fundamentally about. The second is what, if anything, you are willing to contribute toward the fee of a brokerage representing a buyer. Some listing forms address these in one place and some require a separate instruction or an additional form. Ask your broker to point to the exact language covering each, and to explain what authority you are granting and what you are reserving.
Then get the terms of engagement in writing and specific. What the fee is, what triggers it, whether it changes at different price levels, what happens if the buyer is unrepresented, what happens on a dual agency transaction, and what marketing spend is committed rather than merely discussed. Ask what is included in the fee and what will be billed separately. On a significant Los Angeles property, the difference between brokerages is rarely the headline percentage; it is the campaign behind it and the negotiating strength of the person holding the file.
Finally, model the net rather than arguing the rate. Compensation is one line in a settlement statement that also carries transfer taxes, including the City of Los Angeles Measure ULA tax where it applies, county documentary transfer tax, title and escrow charges, prorations and any credits negotiated with the buyer. A structure that looks expensive at the fee line can produce a better net than one that looks cheap, and the only way to know is to run both. Your escrow officer will prepare an estimated seller's statement, and your accountant should see it before you sign.
Industry rules, settlement terms, licensing requirements and lender limits on contributions change, and nothing here sets or predicts a rate, so verify the current position with the relevant association, multiple listing service or agency and obtain advice from your own broker, attorney and tax adviser before agreeing terms.
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