Peninsula Real Estate Guide
The NAR Settlement and Buyer Agreements: What Changed for Peninsula Buyers in 2026
Why you now sign a contract with your agent before you ever tour a home, and what it actually costs you
|
Aug. 2024 NAR Settlement Took Effect |
Before Touring When You Must Sign |
~5.47% Typical Total CA Commission, 2026 |
Usually $0 Most Buyers Still Pay Directly |
If you’re buying for the first time since 2024, one part of the process genuinely changed: you now sign a written agreement with your agent before they ever show you a home. Here’s what actually changed, and what it means for your budget.
What the NAR Settlement Actually Changed
Before August 2024, sellers were effectively required to offer buyer-agent compensation directly on the MLS as a condition of listing, and buyers rarely saw or thought about that number. Following the National Association of Realtors settlement, that MLS advertising requirement was eliminated. Commission rates themselves didn’t change or get capped, and the settlement didn’t eliminate buyer representation. What changed is where that compensation gets negotiated and disclosed, and the paperwork required before you start touring.
California Made This a Legal Requirement, Not Just Practice
AB 2992 and Civil Code §1670.50
California’s legislature followed the national settlement with Assembly Bill 2992, signed in September 2024 and effective January 1, 2025, which codified the written agreement requirement into state law under Civil Code Section 1670.50. California already had a buyer representation form available before this; what changed is that using it became legally mandatory rather than optional professional practice.
What the Agreement Actually Has to Include
| A definite termination date, not an open-ended arrangement |
| The specific geographic area and property types the agreement covers |
| The specific compensation amount or percentage owed to the agent |
| Whether the buyer, seller, or a combination of sources will actually cover that fee |
What This Actually Costs You in Practice
In most California transactions, buyers still don’t pay their agent directly out of pocket. The listing side or the seller typically covers buyer-agent compensation as a negotiated concession, communicated outside the MLS and disclosed to you in writing rather than published for public view. The genuine change is transparency: that number now exists in a signed document you’ve reviewed, rather than being buried in an arrangement between two brokerages you never saw.
The Scenario Worth Understanding Before You Sign
If a seller offers less compensation than what your buyer agreement specifies, or offers none at all, you may genuinely be responsible for covering that gap directly. This is exactly why reviewing the compensation terms carefully before you sign, and discussing what happens if a specific seller doesn’t offer full compensation, matters more now than it used to.
Why Sellers Still Have a Real Incentive to Offer Compensation
Even though sellers are no longer required to offer buyer-agent compensation, most competitive listings still do, typically in the 2.5% to 3% range, specifically to attract the widest possible buyer pool. A seller who declines to offer any buyer-side compensation risks fewer showings, even in a genuinely strong market like San Carlos or Belmont, since it puts a real, explicit cost burden directly on prospective buyers.
What Buyers Should Actually Do
| Read the buyer representation agreement carefully before signing, especially the compensation and term sections |
| Ask your agent directly what happens if a specific seller offers less compensation than the agreement specifies |
| Remember every term, including compensation, duration, and exclusivity, is genuinely negotiable before you sign |
| You’re allowed to interview more than one agent before committing to an agreement |
Key Takeaway
The NAR settlement didn’t eliminate buyer agent compensation or reduce typical costs. It made the arrangement explicit, written, and negotiated upfront rather than hidden in the background, which genuinely puts more informed control in the buyer’s hands, as long as you actually read what you’re signing.
Frequently Asked Questions
Do I have to sign an agreement before an agent shows me a home?
Yes, this is now a legal requirement in California under AB 2992 and Civil Code Section 1670.50.
Will I have to pay my agent out of pocket?
Usually not; most transactions still have the seller or listing side cover buyer-agent compensation as a negotiated concession.
Is buyer agent commission still negotiable?
Yes, every term of the agreement, including compensation, is negotiable before you sign.
What if a seller offers less than my agreement specifies?
You may need to cover the gap directly or negotiate it into your offer; this is worth discussing with your agent before you’re deep into a transaction.
| Related Reading | |
| Dual Agency on the Peninsula: What Buyers Should Know | Understand another key representation question before you sign anything. |
| A First-Time Homebuyer Guide for the Peninsula in 2026 | Factor this new step into your overall buying timeline. |
| Escalation Clauses and Backup Offers | See how compensation terms interact with your overall offer strategy. |
| Realtor vs. FSBO in San Carlos | Understand agent value on the listing side of a transaction too. |
Ready to Start Your Search With Clear Terms Upfront?
I’ll walk you through exactly what a buyer representation agreement covers before you sign anything.
Holly Noto | Coldwell Banker Realty | DRE#01244498, DRE#01908304
580 El Camino Real, San Carlos, CA 94070
650.544.6185 | [email protected]
This content reflects the August 2024 NAR settlement, California AB 2992, and Civil Code Section 1670.50 as of 2026. This content is not legal advice; review any representation agreement carefully and consult an attorney with questions.
