The New Compensation Agreement, Explained for Buyers and Sellers
Real estate commission practices changed in a significant way starting in August 2024, and they still shape how buyers and sellers negotiate today. Here is what you actually need to know, in plain language, so there are no surprises at the closing table.
What changed
Under the new rules, offers of compensation to a buyer's broker can no longer be advertised in the Multiple Listing Service. Those conversations now happen off the MLS, between the parties involved, and buyers must sign a written buyer-broker agreement with their agent before touring a home, which spells out the agent's compensation up front.
In California that agreement is the Buyer Representation and Broker Compensation Agreement (BRBC). State law has required it since January 2025 (AB 2992), and California DRE regulations effective January 1, 2026 (Title 10, Sections 2906.1 through 2906.3, which implement that law) require the signed agreement before a buyer is shown any property. Those regulations also cap the initial term of a buyer-broker agreement, and any renewal, at 90 calendar days starting the day after the last party signs, unless the agreement sets a later effective date, so you are never locked in longer than the state allows. Sellers, in turn, must consent before any offer of compensation to a buyer's representative is made. Are these rules still current? Yes, they remain in effect in 2026: the federal settlement behind the practice changes won final court approval in November 2024, the U.S. Court of Appeals for the Eighth Circuit affirmed the settlement on August 19, 2026, denied rehearing on September 24, 2026, and issued its mandate on October 2, 2026, formally closing the appeals. What has not changed is the practical takeaway: compensation is negotiated, agreed in writing, and understood by every party before touring begins.
Who pays the buyer's agent?
The short answer is that it is now a negotiated matter rather than an automatic default. Buyers may pay their agent directly, from their own funds, a gift, or a seller credit. A seller can still choose to offer buyer-agent compensation as part of the deal; it simply cannot be advertised in the MLS.
The important thing is that the agreement is explicit and in writing, so everyone knows the plan before touring begins.
Why you should ask early
The best time to talk about compensation is at the very start, before you fall in love with a house. That way the numbers are settled and the tour is a pleasure, not a negotiation.
I walk every buyer and seller through their written agreement clearly, so you always know what to expect.
Let's talk it through
If you have questions about how compensation works in your specific situation, I am happy to explain it over a call or a coffee.
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