When you're considering buying a home in San Diego, one very important topic that you shouldn't be too shy to ask about is: How does a buyer's agent get paid?
Over the years I have talked to all sorts of people who have all sorts of ideas of how a buyer's agent gets paid (or should get paid), and I've come to realize there is NOT one perfect way.
You and I will talk about it when we meet for our Buyer Strategy Session, and we will find an option that feels fair to you and to me.
If you'd like more information beforehand, I explain the topic of buyer agent compensation here in this blog post...
What Every Homebuyer Should Know About Buyer's Agent Compensation
First of all, when you begin ramping up your home search, it's very important that you take time to interview and hire an expert buyer's agent to assist you on your home purchase journey. California state law (as of January 2025) requires homebuyers to sign a Buyer Representation Agreement in order to tour a house with a buyer's agent. Part of that agreement is how your buyer's agent will be compensated.
For many years, prior to August 2024, most sellers in San Diego County automatically built both of the real estate agent's (buyer's and seller's agent's) compensation into their asking price AND advertised the "compensation to the buyer's broker" on the MLS and other real estate websites. As a result, buyers and their agents knew how much was being offered to the buyer's agent on every home before they even went to tour the home. There was no set amount; and some sellers offered more than normal, while others offered less than normal. But there was always some amount being offered up-front. There were problems with that compensation model, and changes were made nationwide in August 2024.
Nowadays, most sellers are still willing to build the buyer's agent's compensation into the purchase price, but they're not allowed to advertise it in the MLS. Every state is handling the new rules differently, and the way things work in California doesn't necessarily apply to other parts of the country.
In San Diego County, when a homebuyer submits an offer to purchase a home, they can request the seller to pay their buyer's agent as part of their offer. The vast majority of sellers are willing to consider offers requesting them to pay the buyer's agent's compensation.
When you interview buyer's agents, you'll want to discuss a number of topics including how your buyer's agent will get paid for their services. Once you formally hire your agent, you'll sign a Buyer Representation Agreement, and the compensation you agreed-on will be included in that agreement. If your buyer's agent uses the California Association of REALTORS® standardized forms (like I do with all my clients), then the agreement will explain that you can request the seller to build the buyer's agent's compensation into the purchase price if you prefer not to come out of pocket to pay your agent directly.
What's a Typical Buyer Agent's Compensation in San Diego County?
I find that most sellers in the San Diego market are willing to pay around 2.5% of the purchase price to the Buyer's Agent, but it's not guaranteed. Some may be willing to pay more. Some may be willing to pay less. And if you're looking for a luxury home in the upper echelons of home prices, the average percentage can be smaller.
There is no set fee, so the amount a seller is willing to compensate the buyer's broker can vary from one home to the next. It's important to determine a compensation agreement with your buyer's agent before you start touring homes together.
I've been a proponent of this method (and have discussed buyer agent compensation with all my prospective clients) for many years before the new rules went into effect. To me, it has always made sense for a buyer and their agent to discuss compensation expectations up-front, just like hiring any other professional for any other job. So we will discuss my compensation and work out something that feels fair for both of us when we meet for our initial consultation/interview, which I call a Buyer Strategy Session.
One Advantage of Your Buyer's Agent Getting Paid by the Seller
From a buyer's point of view, there is one clear advantage to having their agent paid by someone else...
The buyer doesn't have to pay their agent out of their own pocket, which leaves the buyer more money for their down payment and closing costs.
If the buyer is paying all-cash, this is not really an advantage at all. In that case there is no obvious advantage to having their buyer's agent paid by the seller.
One Disadvantage of Your Buyer's Agent Getting Paid by the Seller
The money has to come from somewhere, so the buyer is paying a higher purchase price in order for the seller to pay the buyer's agent.
If the seller didn't have to pay the buyer's agent, they could sell the house for a lower price and still have the same bottom line.
A lower purchase price can lead to slightly lower property taxes and possibly a smaller loan amount. If the buyer has the means to pay their agent directly as part of their closing costs, it's worth at least considering. But for many buyers who are using most of their liquid assets to cover their down payment and other closing costs, they still rely on the seller to build the buyer's agent compensation into the purchase price like has been traditionally done for decades.
In several ways, I think the new way of addressing the buyer's agent's compensation is good for homebuyers. In my opinion, there are less "hidden" conflicts of interest and less opportunity for "shady" agents to take advantage of people. I can tell you that there are thousands of people (not my clients) who bought homes in San Diego County in the past who had NO IDEA how much their buyer's agent got paid! So the new way is a LOT more transparent than it was in the past.
The old way also paid every buyer's agent the same, and we all know some buyer's agents are better than others. I think the new system levels the playing field and empowers homebuyers to determine the type of buyer's agent they want working for them. And it helps ensure that "buyer's agents" with less to offer (less experience, worse customer service, inferior assurance of loyalty, etc.) get paid less.
Discuss Compensation During Your Buyer Agent Interview
As you can tell, this is something that I am passionate about. Globella Buyers Realty exists for one purpose, to represent the best interests of San Diego homebuyers on their home purchases.
In order to TRULY be working for my clients - and not for sellers - I have made several adjustments to the way I interact with and go to work for homebuyers like you (and I think you'll find my approach to be different and refreshing).
When we meet for our first interview (I call it our Buyer Strategy Session), we'll have a chance to discuss in more detail exactly how I go to work for you... And compensation will be an important part of our conversation.
If you have any questions about buyer agent compensation, send me an email or call me to request a free Buyer Strategy Session.
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Also Read: What's Included in Your Free Buyer Strategy Session?
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