South Bay Real Estate Commissions: How They Work and Who Pays
Real estate commissions in the South Bay are negotiable. No law sets a rate, and no "standard" percentage applies to every home. The seller and listing agent agree on the listing side in the listing agreement. Since August 17, 2024, buyers and their agents agree on the buyer side in a written buyer agreement before touring. Who actually writes the check at closing is then worked out in the purchase contract.
Here is how each piece works and what to ask before you sign anything.
Commissions are set by agreement, not by law
A commission is usually a percentage of the final sale price, paid from escrow at closing. Some agents charge a flat fee or a tiered rate instead. Whatever the structure, it is a private agreement between you and your agent.
That means the number you hear from a friend in Torrance or a neighbor in Manhattan Beach doesn't apply to you automatically. Fees reflect the scope of work: pricing analysis, preparation, staging, photography, marketing, negotiation and escrow management on the listing side; search, tours, contract strategy and transaction coordination on the buyer side.
When comparing agents, compare what you get for the fee, not just the percentage.
What changed after the NAR settlement
The National Association of REALTORS® settlement led to two practice changes that took effect on August 17, 2024:
- Written buyer agreements before touring. An MLS participant working with a buyer must have a written agreement before the buyer tours a home. The agreement has to state the agent's compensation as a specific, objectively determinable amount, and the agent can't receive more than that amount from any source.
- No compensation offers on the MLS. Listing agents can no longer advertise an offer of compensation to buyer agents on the MLS. Sellers can still choose to pay some or all of a buyer agent's fee; that's simply negotiated outside the MLS, often as part of the offer.
In practice, buyers now see the cost of representation in writing up front, and sellers decide case by case whether to contribute.
Who typically pays
There are three common arrangements:
- The seller pays both agents. The listing agreement covers the listing agent, and the seller agrees in the purchase contract to pay the buyer's agent too. This is still common.
- The seller pays the listing agent; the buyer pays their own agent. The buyer's agent is paid under the buyer agreement, either from the buyer's funds at closing or through financing where the loan program allows.
- A split. The buyer asks the seller to cover part of the buyer agent's fee, and the buyer pays the rest.
As a buyer, you can include a request for the seller to pay your agent in your offer. That request is negotiable like price, credits and closing dates. Sellers weigh it alongside everything else in the offer.
My take: Treat commission as one line in the overall deal, not a separate fight. A seller who contributes to the buyer agent's fee may want a stronger price or fewer repair requests, and a buyer who pays their own agent may want a lower price. Look at the net number.
Questions to ask before signing a listing agreement
If you're selling in Redondo Beach, Hermosa Beach or anywhere in the South Bay, ask:
- What exactly does the fee include? Staging, photography, video, pre-listing inspections, print and digital marketing?
- How long is the listing term, and what happens if I want to cancel?
- Will you recommend offering to pay a buyer's agent, and why?
- How will you present offers that include a request for buyer-agent compensation?
- What's your pricing strategy, and how will you adjust it if activity is slow?
See how I market and sell homes for my approach.
Questions to ask before signing a buyer agreement
If you're buying, the written agreement is now required before touring, so read it closely:
- What is the compensation amount, and how is it stated (percentage, flat fee or other)?
- If a seller offers to pay some or all of it, how is that credited?
- What's the term, and can I end the agreement early?
- Is the agreement limited to certain areas or property types, or to one specific home?
- What services are included through closing?
If you want to tour a single home first, you can ask for a short, property-specific agreement. Learn more about how I work with buyers.
Can an agent rebate part of the commission?
In California, an agent may share or rebate part of the commission with a buyer or seller who is a party to the transaction, provided it is disclosed. If there's a loan, the lender must approve how a rebate is applied, and it often has to go toward closing costs rather than being paid in cash. Ask your lender before you count on one.
What else shows up on the closing statement
Commission is often the largest line item for sellers, but it isn't the only one. Sellers in Los Angeles County also typically see escrow and title charges, the county documentary transfer tax (and a city transfer tax in some cities), prorated property taxes, payoff of existing loans, and any agreed credits or repairs. Buyers see lender fees, title and escrow charges, prepaid taxes and insurance, and their agent's fee if it isn't paid by the seller.
Ask for an estimated net sheet (sellers) or a Loan Estimate plus a cost worksheet (buyers) early, so there are no surprises in escrow. If you'd like to start with a value estimate, request a home value review.
The bottom line
Commissions are a negotiated price for a service. Get the terms in writing, understand what's included, and judge the fee against the result, not the percentage alone.
Sources: National Association of REALTORS®, settlement practice changes effective August 17, 2024 (nar.realtor); NAR, "Written Buyer Agreements 101"; California Department of Real Estate guidance on commission rebates.
Robert Neff, Ph.D., REALTOR® | CA DRE #02442812 | eXp Kaminsky Real Estate Group, Corporate DRE #01878277 | (424) 999-7761. Equal Housing Opportunity. This article is general information, not legal, tax or financial advice. Rules and market conditions change. Information deemed reliable but not guaranteed.