Real estate commission in California: the short answer
California does not set real estate commissions. State law requires every listing and buyer agreement for a home of one to four units to say so, in bold type, right before the compensation terms: "The amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker" (Business and Professions Code section 10147.5, with matching wording for buyer agreements). The same law bars printing a rate on those forms, so the number is always filled in by hand.
What agents actually charge comes from surveys, not from any official record. Clever Real Estate's August 2026 survey, which included 50 agents in California, put the average listing commission at 2.57% and the average buyer's agent commission at 2.51%, for a total of 5.08%. Clever sells discounted agent services, and 50 responses is a small sample, so treat those figures as a rough guide rather than a statewide statistic.
Since August 17, 2024, the national practice changes from the National Association of REALTORS settlement, and since January 1, 2025, California's own buyer-broker law, mean the listing commission and the buyer's agent commission are now negotiated separately. The rest of this guide explains the rules, the math and how to negotiate.
How real estate commission works in California
The commission is paid to the broker, not the agent
In California, a salesperson can be paid for real estate work only through the broker they are licensed under (Business and Professions Code section 10137). The commission goes to the brokerage at closing, and the brokerage pays the agent their share under their own agreement. That is why a listing agreement names a brokerage, and why "my agent takes home 5%" is rarely true.
Listing agreements: what the seller signs
A seller signs a listing agreement with a brokerage before the home goes on the market. It sets the commission, the length of the listing, whether the seller will offer anything toward the buyer's agent, and what happens if the seller cancels. Before signing, the listing agent must give the seller the state's agency disclosure form (Civil Code section 2079.14).
Buyer-broker agreements: what the buyer signs
Since January 1, 2025, Civil Code section 1670.50 (added by AB 2992) requires a written buyer-broker representation agreement no later than when the buyer signs an offer. It must cover the broker's compensation, the services provided, when compensation is due and how the contract ends. The agreement cannot last more than three months, cannot renew automatically, and is void if it breaks those limits. The three-month cap does not apply when the buyer is a corporation, LLC or partnership.
Paid through escrow at closing
Commissions are paid from the escrow account when the sale closes. If the sale falls through, the broker is usually not paid, although many listing agreements include terms for a seller who cancels or refuses a full-price offer. Read the "compensation" and "termination" paragraphs before signing.
What changed in 2024 and 2025
The NAR settlement practice changes (August 17, 2024)
Under the settlement, the National Association of REALTORS changed two practices nationwide on August 17, 2024. First, REALTOR multiple listing services may no longer publish offers of compensation to buyer's agents. Second, agents working with a buyer must have a written agreement before touring a home. NAR's consumer pages say the compensation in a buyer agreement must not be open-ended and must be "objectively ascertainable," and an agent may not receive more than the amount agreed in it.
Sellers can still pay toward the buyer's agent
NAR says a seller "can choose to offer, or authorize your agent to offer, compensation to a buyer's agent" and may offer concessions to attract buyers or close a deal. The difference is that these offers are no longer posted on the MLS. They are made directly or written into the purchase contract, often as a request from the buyer.
California's buyer-broker rule (January 1, 2025)
California went further than the settlement by putting the buyer agreement into state law. The agreement is mandatory by the time of the offer, limited to three months at a time, and any renewal must be in writing, dated and signed by everyone. A licensee who breaks the rule has violated their licensing law (section 1670.50(e)).
Worked example: commission on a typical California home
The table applies Clever's August 2026 survey averages to Zillow's typical home value for California and four large counties in September 2026. Real commissions vary by agent, home and market; this shows the scale of the money involved.
| Area | Zillow typical value (Sept 2026) | Listing side at 2.57% | Buyer side at 2.51% | Total at 5.08% |
|---|---|---|---|---|
| California | $761,538 | $19,572 | $19,115 | $38,686 |
| Riverside County | $602,790 | $15,492 | $15,130 | $30,622 |
| Los Angeles County | $871,674 | $22,402 | $21,879 | $44,281 |
| San Diego County | $926,979 | $23,823 | $23,267 | $47,091 |
| Santa Clara County | $1,562,682 | $40,161 | $39,223 | $79,384 |
Totals are calculated on the full rate, so they can differ from the sum of the two sides by a dollar of rounding.
What half a percentage point is worth
On California's typical $761,538 home, every 0.5 percentage point of commission is $3,808. On Santa Clara County's typical $1,562,682 home it is $7,813. That is why small differences in rate matter more in high-priced counties, and why sellers there often negotiate a tiered rate rather than a single percentage.
Commission in a seller's net proceeds
Say a seller in Riverside County sells at the county's typical $602,790, pays 2.57% to the listing brokerage and agrees to pay 2.51% toward the buyer's agent. Commission totals $30,622 at 5.08%. If the seller instead pays only the listing side and the buyer pays their own agent, the seller's commission cost falls to $15,492, but the buyer may offer less or ask for a credit. Add the county transfer tax and escrow and title costs to see the full picture; our California closing costs guide lists them, and the transfer tax guide gives city rates.
Who pays the realtor commission in California
The seller pays the listing side
The listing brokerage is paid by the seller under the listing agreement, out of the sale proceeds at closing. This has not changed.
The buyer's agent: paid by the buyer, the seller or both
The buyer's agreement sets what the buyer's broker earns. That amount can be paid by the buyer directly, by the seller as a term of the purchase contract, by the listing broker sharing part of its fee, or a mix. If the seller agrees to pay less than the buyer agreement requires, the buyer may owe the difference, so buyers should know their agreed amount before writing an offer.
Commission and taxes on the sale
The IRS treats sales commissions as a selling expense that reduces the amount realized on a home sale. That lowers any taxable gain, which matters for sellers above the federal exclusion. See our capital gains tax guide for the full calculation.
How to negotiate a real estate commission in California
Ask what the fee covers
Ask each agent to list what is included: pricing analysis, photos and video, staging, marketing, open houses, offer review, escrow management and repair negotiations. Compare services, not just rates.
Consider a tiered or flat fee
Common structures include a lower rate on the first part of the price and a higher rate above a target price, or a flat dollar fee. These are allowed because the law leaves the rate to the parties.
Set the term and cancellation terms
A shorter listing period gives you a way out if the home does not sell. Ask about cancellation fees and the "protection period," during which a fee is still owed if someone the agent introduced buys later.
Decide the buyer-side offer with your agent
Discuss whether to offer anything toward the buyer's agent, and how much, based on what buyers in your price range expect. Offering nothing may narrow your pool of buyers; offering too much costs you money.
Buyers: negotiate before you tour
Because the written agreement now comes before the first tour, buyers can compare agents' rates and services up front. Ask for a short term, a clear amount and what happens if the seller pays part of the fee.
Choosing the right agent often matters more than the rate. Our city pages explain what to ask a local agent, and our selling guide and buying guide cover the rest of each process.
Special cases: probate, new homes and dual agency
Probate sales
When an estate sells a home, the commission binds the estate only for the amount the court allows, and nothing is owed unless the sale is made, confirmed if required and closed (Probate Code sections 10160 and 10161). See our probate real estate guide.
New construction
Builders set their own policy for paying agents who bring buyers. Ask the sales office about it before your first visit, and register your agent if the builder requires it, because your buyer agreement still sets what your broker is owed.
One agent for both sides
If one agent or brokerage represents both buyer and seller, the agency disclosure form you receive under Civil Code section 2079.14 explains what that relationship means. Get the arrangement in writing, and ask whether the total commission will be reduced because one brokerage is earning both sides.
Common commission mistakes
- Assuming a "standard" rate. There is none in law. Every rate is a negotiation.
- Not reading the buyer agreement amount. If the seller pays less than the agreement says, the buyer may owe the gap.
- Signing a long listing with no exit. A shorter term with an option to extend keeps leverage with the seller.
- Comparing rates without comparing services. A lower fee that leaves out photos, staging or marketing can cost more in price.
- Forgetting the protection period. Selling to a buyer the agent introduced, soon after the listing ends, can still trigger a fee.