Understanding the Shift in Real Estate Commissions
You may have been wondering about the changes to how real estate agents get paid and we wanted to help clear up the issue. The 2024 National Association of Realtors (NAR) settlement has reshaped the way commissions are handled across the U.S. and it’s already having a noticeable impact here in San Diego’s luxury and investment markets.
The biggest changes we’re seeing are around transparency and choice.
Now, buyers and sellers have more control over how agent compensation is structured, with clear written agreements and open discussions replacing decades of hidden practices.
Overview
For years, real estate commissions were bundled into listing agreements, while many buyers were unaware of what their agent was actually paid. The goal of the 2024 NAR settlement was to create more transparency and empower consumers on both sides of the transaction. While this is a national change, it’s particularly relevant in San Diego, where property values are high and transactions often involve complex negotiations.
What Changed Under the NAR Settlement
The NAR settlement, effective August 17, 2024, introduced two major updates that every San Diego buyer and seller should understand:
- No more automatic commission sharing on the MLS.
Multiple Listing Services (MLS) can no longer display or require compensation offers between listing and buyer brokers. Sellers can still offer compensation, but it must now be negotiated and shared off-MLS. - Written buyer agreements are now required.
Before touring a home, buyers must sign a written agreement with their agent that defines compensation terms, whether it’s a flat fee, hourly rate or negotiated percentage.
What Agents Can (and Can’t) Do Under the New Rules
The settlement changed how commissions are discussed—but not the fact that real estate professionals provide valuable expertise throughout a transaction.
Agents can still:
- Negotiate compensation directly with clients
- Accept compensation from sellers (off-MLS) or from buyers by agreement
- Create services that tailor to a buyer’s or seller’s goals
- Offer competitive pricing models via flat fees, percentages or hourly consulting
Agents can’t:
- Filter or exclude listings based on commission rates (the “anti-steering” rule)
- Hide compensation details or imply there’s a “standard” rate
- Fail to disclose in writing, that all commissions are negotiable
For buyers and sellers alike, this adds an extra layer of protection and ensures everyone is making decisions with full visibility.
How This Affects San Diego Sellers
For home sellers, the biggest change is flexibility.
You can now decide whether or not to offer a buyer-agent commission; and if you do, how much. Offering compensation to buyer agents can still be a strategic move to attract more qualified buyers, especially in competitive neighborhoods like La Jolla, Del Mar, Encinitas and Solana Beach.
That said, these offers can’t be published on the MLS anymore. Your agent must discuss and disclose any off-MLS arrangements in writing.
Tip: Sellers can still offer buyer concessions (such as help with closing costs) on the MLS. This keeps listings competitive without committing to traditional commission structures.
Smart Strategies for San Diego Sellers
- Offer a clear breakdown of services when listing, transparency builds trust with buyers’ agents.
- Consider including a buyer-agent concession for luxury or complex listings to increase visibility.
- Work with an agent who understands how to position your property competitively without overcommitting on commission.
If you’re planning to sell your home and want guidance on how these changes affect your pricing and positioning, learn more about Jessica’s Real Estate Strategy Representation.
How This Affects San Diego Buyers
For buyers, transparency is the big win. You’ll now review and sign a buyer representation agreement before you start touring homes.
That agreement:
- Spells out exactly how your agent will be paid
- Confirms that commissions are fully negotiable and not set by law
- Clarifies whether the seller is offering compensation or if you’ll handle it directly
This structure gives buyers the freedom to choose the representation model that fits their goals and budget; something especially valuable for investors, attorneys and fiduciaries entering complex deals or high-value properties.
Buyers using VA loans also benefit from a temporary rule adjustment. The VA lifted its long-standing restriction on veterans paying buyer-agent commissions, making it easier for military buyers to stay competitive in today’s market.
In San Diego’s fast-paced real estate environment, where properties often receive multiple offers, understanding your representation agreement upfront prevents confusion and strengthens your negotiating power.
What Buyers Should Ask Their Agent
Questions to Ask Before You Sign a Buyer Agreement
- What specific services are included in your representation?
- How will you be compensated: flat fee, hourly or percentage?
- Will I owe anything out-of-pocket if the seller doesn’t cover the fee?
- How do you handle dual representation or conflicts of interest?
- Can you explain how this agreement protects me as a buyer?
Having these conversations up front builds trust and clarity. In my experience, when both sides understand exactly how representation works, transactions move faster and negotiations stay focused on value.
How These Changes Affect Negotiation and Pricing
Commissions have always influenced offer strategy, but under the new system, they’re now part of the negotiation toolkit.
Buyers can factor their agent’s fee into their offer price, request concessions from the seller, or structure terms that create a win-win outcome. Sellers can evaluate offers not just by price, but by how commission responsibilities are split.
In high-end markets like Rancho Santa Fe or Del Mar, where every detail impacts perceived value, clarity on fees can actually strengthen a negotiation. Sellers who proactively outline compensation options often find that buyers respond with more confident, and competitive, offers.
Ultimately, the best results come from transparency, strategy and communication, three qualities Jessica emphasizes in every transaction.
How to Choose the Right Agent Under the New Rules
Not all agents approach this new system the same way. Here’s how to choose one who protects your interests and guides you through the changes with confidence:
- Ask how they structure buyer or seller representation agreements.
- Look for experience handling luxury, investment or complex transactions.
- Ensure they can clearly explain compensation and negotiation strategies.
- Confirm they use professional marketing and valuation processes.
- Pay attention to responsiveness and how clearly they explain everything, it reflects how they will handle your deal.
With these changes, it’s more important than ever to have an agent who combines expertise with transparency.
Local Market Context: What’s Happening in San Diego
According to the latest Case-Shiller Index, San Diego home values have climbed roughly 66% since early 2020, with a modest 0.6% year-over-year adjustment as of mid-2025. Inventory remains tight, particularly along the coast, keeping pressure on pricing despite broader economic cooling.
Luxury listings in Rancho Santa Fe and Solana Beach continue to see multiple-offer activity, while buyers across North County are becoming more selective about property condition and pricing.
In this climate, understanding exactly how commissions factor into a transaction can make the difference between closing smoothly and leaving money on the table.
Jessica’s Take: What She’s Seeing on the Ground
“What I’m seeing on the ground in San Diego is a lot of confusion around who pays what commission and how commissions work now in light of the NAR settlement. A lot of buyers and sellers have questions and want to know how this impacts their bottom line.
People get frustrated with real estate commissions because they feel like they’re overpaying for something that doesn’t deliver value.
And truthfully, that’s often the case. People use a family friend or someone that they know. But what they don’t know is how much that may be impacting their bottom line to the tune of tens of thousands of dollars.
The right agent should create measurable value around a client’s biggest asset. The commission, when earned properly, is a reflection of that added value.
If you’re paying X, the goal is that your home ultimately sells for more than it would have without that expertise, because the right strategy, preparation, and execution produced a higher return.
It’s not always easy to quantify, but think about it:
- How much is the right pricing strategy worth?
- How much are strategic upgrades that yield a higher ROI worth?
- How much value do professional photos and marketing bring?
- And how much is an agent who truly negotiates and finds the top of the market for your property worth?
Those things are hard to measure precisely, but the agent who knows all the tools and actually applies them is the one who maximizes your return.
And on the flip side, some of the most basic signs of poor representation show up all the time:
- A property that’s never listed on the open market and is double-ended by the same agent, a telltale sign it likely sold below its potential value because it was never properly marketed, giving no chance for real competition.
- iPhone photos, one photo, or dark, cluttered images, these might seem minor, but they determine how many buyers even show up. It’s simple, yet it happens constantly.
These seemingly small things add up to big differences in outcome. The right agent understands that every detail, from exposure to presentation to negotiation, directly impacts how much a property sells for.”
The best strategy still comes down to clear communication, strong negotiation and working with an agent who understands the nuances of the new system.
Common Misconceptions Regarding the NAR Settlement
“Sellers no longer pay any commissions.”
Not true. Sellers can still choose to offer buyer-agent compensation—it’s simply no longer automatic.
“Agents can’t cooperate anymore.”
False. Agents can absolutely collaborate; they just need to formalize their agreements off-MLS.
“Buyers now have to pay everything out of pocket.”
Not necessarily. Sellers often still contribute via concessions or price negotiations.
“This will lower home prices.”
There’s no evidence to support that. Pricing continues to reflect demand, location, and property condition, especially in high-demand markets like coastal San Diego.
FAQ: Real Estate Commissions After the NAR Settlement
Are real estate commissions still negotiable?
Yes. Commissions have always been negotiable, and the new rules make that even clearer. Both buyers and sellers have full control over how their agents are compensated.
Who pays the buyer’s agent now?
It depends on the transaction. Buyers and sellers negotiate compensation directly. Some sellers still offer a concession or credit to attract more buyers.
Do these rules apply to luxury and investment properties?
Yes. All residential transactions, including luxury estates and multi-unit investments, follow the same transparency standards.
Will this make buying or selling more expensive?
Not necessarily. It’s about clarity, not cost. Many clients find they save money when compensation is negotiated openly and strategically.
Do I have to use an agent now?
Representation is optional, but professional guidance is invaluable, especially in high-stakes markets. The right agent helps you avoid costly missteps.
How do these changes affect closing costs?
Buyers and sellers now have flexibility in how commissions are applied at closing. Sellers can offer credits, or buyers can build fees into their offer.
Does this impact off-market or pocket listings?
Yes. Even private transactions must follow written-agreement and disclosure standards to ensure transparency.
Can a buyer and seller use the same agent?
Dual agency is still allowed in California, but it requires full written consent from both parties and careful management to avoid conflicts of interest.
Key Takeaways for Buyers and Sellers
- Commissions are now fully negotiable. There’s no “standard” percentage anymore; everything is defined in writing.
- Sellers decide if they’ll offer compensation to buyer agents (off-MLS).
- Buyers must sign a written agreement outlining their agent’s role and pay structure before touring homes.
- Transparency is the goal. The new rules protect both sides by eliminating hidden incentives and making every dollar accountable.
Have questions about how the NAR settlement impacts your next move? Book a personalized consultation with Jessica to discuss your goals and strategy.
Ready to make sense of the new commission rules?
Whether you’re selling a luxury property, navigating a complex transaction or simply want to understand your options, Jessica will help you understand the nuances so you can make confident, informed decisions.
👉 Schedule a consultation today
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