California Buyer Agency Agreement: 2025 Guide & Commission Tips

If you’re buying a home in California right now, you’ve encountered something brand new: signing a formal California buyer agency agreement before touring properties. This requirement, triggered by the August 2024 NAR settlement and reinforced by California Assembly Bill 2992 (effective January 1, 2025), has fundamentally changed how buyers work with real estate agents.

Here’s what catches most buyers off guard: you may now be responsible for paying your agent’s commission directly, something sellers traditionally covered. On a $600,000 home, that 3% commission equals $18,000—an expense most first-time buyers never budgeted for.

This guide covers exactly what California’s buyer agency agreement requires, how to negotiate commissions that fit your budget, and which contract clauses need your attention. You’ll learn strategies for requesting seller concessions and protecting yourself from problematic agreement terms.

What Is a California Buyer Agency Agreement?

A California buyer agency agreement is a legally binding contract between you and a real estate agent that establishes their representation during your home-buying process. This written contract outlines services your agent provides, compensation, and relationship duration.

Before August 2024, these agreements were optional. The NAR settlement changed everything. California now mandates written buyer representation agreements with specific requirements before agents can show properties.

Important: California law sets minimum requirements. Individual agents may propose stricter terms, but you are not required to accept them. Everything in your buyer agency agreement is negotiable.

Why California Requires Written Agreements Now

Two major regulatory changes created this requirement:

The NAR Settlement (August 17, 2024): The National Association of Realtors agreed to a $418 million settlement following antitrust lawsuits challenging traditional commission practices. According to the settlement terms finalized in April 2024, buyer agent commission offers were removed from MLS platforms and written agreements became mandatory before property tours.

California Assembly Bill 2992 (January 1, 2025): California extended requirements beyond NAR-member MLSs to cover all real estate transactions statewide. As clarified in Assembly Bill 2992, the law imposes stricter protections, including maximum three-month duration and prohibitions against automatic renewals.

These changes shifted financial responsibility for buyer agent commissions from sellers (who traditionally paid automatically) to buyers, who must now actively negotiate these fees.

Types of California Buyer Agency Agreements

Feature	Exclusive	Non-Exclusive	Property-Specific
Commitment Level	High	Low	Very Limited
Agent Incentive	Strong	Moderate	Limited
Your Flexibility	Low	High	High
Typical Use Case	Serious buyers	Early search phase	One-off property
Can Work with Multiple Agents?	No	Yes	Yes (for other properties)
Easy to Terminate?	No (holdover applies)	Yes (immediate)	N/A (single property)

Exclusive Right to Represent

Guarantees your agent receives payment if you purchase any property within specified area and type during the term, regardless of whether your agent found it.

Pros: Dedicated service, prioritized attention. Cons: Locked in up to three months, cannot work with other agents.

Non-Exclusive Agreement

Lets you work with multiple agents simultaneously. Your agent only receives payment if they directly facilitate the transaction.

Pros: Maximum flexibility, immediate termination rights. Cons: Less dedicated service, some agents refuse these terms.

Property-Specific Agreement

Limits representation to one particular property. Works when you’ve found a property but need professional guidance.

Pros: Minimal commitment, clear scope. Cons: Separate agreements needed for each property.

Critical Components of Every California Buyer Agency Agreement

California law mandates specific elements in every buyer representation agreement. Missing components can render agreements void and expose agents to California Department of Real Estate disciplinary action.

Compensation Amount or Rate

Your California buyer agency agreement must specify exactly how much you’ll pay:

Percentage-based: 2.5% or 3% of purchase price (most common)
Flat fee: Fixed amount like $5,000 regardless of price
Hourly rate: $150-$300 per hour

According to recent market data from early 2025, average buyer agent commission in California declined to approximately 2.37%, down from traditional 3%.

Critical rule: Whatever you agree to serves as the maximum your agent can collect from any source. If you agree to 2.5% but the seller offers 3%, the extra 0.5% goes to the seller’s agent—not yours.

Example: A buyer signs a 2.25% agreement on a $700,000 home. Agent compensation = $15,750. If the seller offers only 2% ($14,000), the buyer covers the remaining $1,750 unless negotiated otherwise.

Services to Be Provided

California requires clear service descriptions. Your agreement should itemize deliverables like property search assistance, scheduling tours, comparative market analysis, offer preparation, and negotiation. Vague language like “full representation services” doesn’t meet California’s requirement.

Expiration Date and Duration Limits

California’s three-month maximum: Per AB 2992, individual buyer agreements cannot exceed 90 days. Any agreement exceeding this is void. No automatic renewals permitted—continuing requires a new written agreement also capped at three months.

Holdover or Protection Period

Even after your California buyer agency agreement expires, if you purchase a property your agent showed during the active term, you still owe commission if the purchase falls within the holdover period (typically 30-90 days post-expiration).

Example: Agreement expires March 31. On April 15, you purchase a property the agent showed in February. Agent can claim commission if the holdover covers April 15.

Disclosure That Commissions Are Negotiable

California law requires conspicuous statements that commissions aren’t set by law and are fully negotiable. Any agent claiming “commissions are standard at 3%” misrepresents legal reality.

How California Buyer Agency Agreement Requirements Changed in 2025

NAR Settlement Requirements (August 17, 2024)

Written agreement before tours
MLS commission removal—negotiations happen privately
Compensation transparency—agents cannot collect more than agreed from any source

California AB 2992 Additional Protections (January 1, 2025)

Three-month maximum duration for individual buyers
Timing flexibility: “as soon as practicable, but no later than execution of buyer’s offer”
Statewide application to all transactions, not just MLS properties
Enhanced disclosure requirements

In practice: Most California agents require signing before touring, even though AB 2992 allows signing no later than offer submission. Agents follow the stricter NAR timeline to ensure compliance with both requirements. According to the California Department of Real Estate (DRE), violations render agreements void and licensees face potential disciplinary action including fines and license suspension.

Who Pays Real Estate Agent Commissions Under the California Buyer Agency Agreement?

Before August 2024, sellers paid both listing and buyer agent commissions automatically. Now, you (the buyer) negotiate your agent’s commission. You have four options:

Option 1: Request Seller Concession—Per California Department of Real Estate (DRE) guidance, buyers may “request the seller to pay some or all of the compensation owed to the buyer’s agent as a seller’s concession.” This often succeeds in balanced markets.

Option 2: Pay Out-of-Pocket—Pay your agent directly from cash reserves at closing if sellers refuse concessions.

Option 3: Negotiate Lower Commission—Market data from early 2025 shows buyers negotiating down to an average 2.37%, saving $2,520 on a $400,000 purchase.

Option 4: Use Alternative Models—Discount brokerages charge $1,000-$3,500 or 1-1.5% commission rates.

Important: If you agree to 2.5% but the seller offers 3%, the surplus goes to the seller’s agent—not to you or your agent. Your agreement caps your agent’s compensation per NAR settlement terms.

How to Negotiate Your California Buyer Agency Agreement Commission

Research and Interview

Research typical commission rates (averaging 2.37% in early 2025). Interview at least three agents and compare commission structures, services, experience, and responsiveness.

Propose Alternative Structures

Flat fee: $4,000-$6,000 for defined services
Tiered structure: 2.5% up to $500,000, then 2% above
Hourly with cap: $200/hour with $10,000 maximum

Use Professional Language

“I’ve researched commissions in this area and I’m seeing 2-3%. Given my budget, I’m comfortable with 2.25%. Can you work within that range?”

“I’m a serious buyer with strong financing, ready to move quickly.”

Your leverage varies by market. Buyer’s markets give maximum power. Seller’s markets reduce leverage, but rates remain negotiable.

Red Flags in California Buyer Agency Agreements

According to contracts law professor Tanya Monestier’s analysis for the Consumer Federation of America, many buyer representation agreements are “incomprehensible” to average homebuyers, with dense text obscuring financial obligations.

Commission Modification Clauses—Strike language like “Agent may accept additional compensation offered by seller.” Add instead: “Agent’s compensation cannot exceed [agreed amount] from any source without buyer’s prior written consent.”

Automatic Renewal Provisions—California law prohibits these. Any automatic renewal is void and unenforceable.

Vague Service Descriptions—Demand itemized deliverables like “Provide MLS access within 24 hours” or “Schedule tours at buyer’s request.”

Unclear Holdover Periods—Require clear holdover duration (30-60 days), written list of properties shown, and statement that only properties your agent showed trigger obligations.

Dual Agency Without Explanation—Cross out dual agency provisions or add: “Buyer does not consent to dual agency under any circumstances.”

Overly Broad Geographic Scope—Limit to specific cities where you’re actively searching, not entire counties.

Understanding Seller Concessions for Buyer Agent Commissions

Requesting seller concessions for your agent’s commission is legal and often successful. According to California DRE, this remains permissible under current law.

How to Request

Include in your purchase offer: “Buyer requests Seller to pay $[amount] or [percentage] as seller concession to cover Buyer’s Agent compensation per Buyer Representation Agreement dated [date].”

Success Factors

Buyer’s markets with high inventory, properties on market 60+ days, strong offers with quick closings, or comparable sales showing similar concessions improve your chances.

Seller’s markets with multiple offers, below-market offers, sellers with limited equity, or FSBO sellers typically resist. In competitive markets, concession requests may weaken your offer.

Common California Buyer Agency Agreement Mistakes to Avoid

Signing Without Reading—Request agreements 24 hours before signing. Read every section or have an attorney review.

Overly Broad Geographic Scope—Limit scope to specific cities, not entire counties.

Not Negotiating Commission—Commission is legally negotiable. Interview multiple agents to understand rate ranges.

Ignoring Holdover Periods—Holdover extends liability 30-90 days after expiration. Request written property lists.

Dual Agency Without Understanding—Cross out consent provisions or add “Buyer does not consent to dual agency.”

Not Verifying Agent License—Verify California DRE license at dre.ca.gov before signing.

Accepting Verbal Promises—Insist all terms appear in written agreements.

Before You Sign: Essential California Buyer Agency Agreement Checklist

Use this checklist to protect yourself before signing any California buyer agency agreement:

Legal Requirements (California Law):

☐ Commission amount is clearly stated and capped (specific %, flat fee, or hourly)
☐ Agreement duration is 90 days or less
☐ No automatic renewal language exists
☐ Statement included that commissions are negotiable and not set by law
☐ Services are itemized (not vague “full service” language)
☐ Payment timing is specified (typically at closing)

Protect Your Interests:

☐ Geographic area is limited to specific cities/neighborhoods
☐ Holdover period is defined and reasonable (30-60 days max)
☐ Dual agency consent is understood or removed entirely
☐ Termination terms are clear
☐ No language allowing unilateral commission increases
☐ Written list of properties shown will be provided

Before Signing:

☐ You’ve interviewed at least 3 agents
☐ You’ve negotiated commission based on market research
☐ You’ve had 24+ hours to review the agreement
☐ All verbal promises are in writing
☐ You understand every clause you’re agreeing to

FAQ: California Buyer Agency Agreement Questions Answered

Is a buyer agency agreement mandatory in California?

Yes, as of August 17, 2024 (NAR settlement) and January 1, 2025 (California AB 2992). According to California law, you must sign a written buyer representation agreement before your agent can show you properties or represent you in a transaction. This applies to all California real estate transactions, whether MLS-listed or private sales.

Can I tour homes without signing an agreement?

You can attend open houses without an agreement since these are public events. However, for private showings or tours with a specific agent, per the NAR settlement finalized August 17, 2024, most California agents require signed agreements beforehand. While California AB 2992 technically allows signing “no later than submitting your offer,” industry practice follows the stricter NAR timeline requiring agreements before tours.

Is the California buyer agency agreement negotiable?

Absolutely. California law explicitly requires every buyer agency agreement to include a statement that commission is negotiable and not set by law. Everything is negotiable: the commission percentage or amount, agreement duration (up to 90-day maximum), geographic scope, holdover period, services provided, and termination terms. Never accept an agent’s first proposal as fixed.

Can I cancel a buyer agency agreement early?

It depends on the agreement type. Non-exclusive agreements can be terminated immediately with written notice. Exclusive agreements typically allow termination but trigger the holdover period (30-90 days), meaning you may still owe commission if you purchase properties the agent showed during the active term. Review your specific termination provisions before signing, and negotiate favorable exit terms upfront.

Do I have to pay my real estate agent’s commission in California?

Not necessarily. You can request the seller pay it as a seller concession. Many sellers agree, particularly in balanced markets. If sellers refuse, you’ll pay from cash reserves, negotiate a lower rate, or use alternative service models (discount brokerages, flat-fee services). The key change: you must actively negotiate compensation.

What’s the difference between exclusive and non-exclusive buyer representation?

Exclusive representation guarantees your agent payment if you purchase any property within specified area during the term, even if you found it independently. Non-exclusive means your agent only gets paid if they directly facilitated your purchase. Exclusive offers dedicated service but locks you in up to 90 days. Non-exclusive provides flexibility.

How long can a California buyer agency agreement last?

Per California AB 2992 (effective January 1, 2025), individual buyer agreements are limited to 90 days maximum. Any agreement exceeding this is void. No automatic renewals permitted—renewals require new written agreements also capped at 90 days.

What is a holdover period and how does it work?

A holdover period extends your agent’s commission rights after agreement expiration. If you purchase a property your agent showed during the active term, you still owe commission if the purchase occurs within the holdover period (typically 30-90 days post-expiration). Negotiate shorter holdover periods and require written lists of properties shown.

Conclusion: Navigate California’s New Buyer Agency Agreement Rules With Confidence

California’s buyer agency agreement requirements represent the most significant change to home buying in decades. The August 2024 NAR settlement combined with California Assembly Bill 2992 shifted buyer agent commission from seller-paid to buyer-negotiated responsibility.

Three critical takeaways:

Commissions are fully negotiable—Interview multiple agents, propose alternative structures, and use market data showing average rates at 2.37%.

Read before you sign—Your California buyer agency agreement obligates you to thousands of dollars. Review every provision, particularly compensation, holdover periods, geographic scope, and dual agency consent.

Seller concessions work—You can request sellers pay your agent’s commission during negotiations. This often succeeds in balanced markets.

Your next step: Interview at least three buyer’s agents before touring homes. Compare their proposed commissions, services, and contract terms. Only sign when you’ve found an agent you trust, at a rate you can afford, with terms you understand completely.

Need help? Consider consulting a California real estate attorney before signing. A one-hour consultation costs $200-$400 but could save thousands.