On this page
- No law sets the commission. California makes listing forms for one to four units say so in boldface, and bars those forms from printing a rate in advance.
- A fee can be a percentage, a flat amount, tiers that change with the price, or a lower figure when the listing brokerage also brings the buyer.
- Since August 17, 2024, NAR's rules keep offers of compensation to buyers' brokers off the MLS, and since January 1, 2025, California has required buyers' agents to have written agreements with their buyers.
- The agreement's own words decide when the fee is earned, whether at closing or when the broker produces a buyer ready, willing and able to buy on your terms.
The commission on an apartment building sale is whatever you and the listing broker agree to in writing. No statute sets a rate, so the amount, its structure, the share that reaches a buyer's broker and the moment it is earned all stay open until you sign.
Treat a broker's first proposal as an opening offer. Ask every broker you interview for one in writing, so you can compare them clause by clause instead of by headline number.
Is the commission negotiable?
Yes, and on smaller buildings the form has to tell you so. Business and Professions Code section 10147.5 requires a printed listing form for residential property of up to four units to carry a boldface notice, right before the compensation clause, that commission rates are not fixed by law, that each broker sets its own, and that they may be negotiable between seller and broker. The same section keeps the amount or rate from being printed on the form in advance, so it has to be filled in for your sale.
A form for a building of five or more units is outside that section and may leave the notice off. The rule behind it still holds. NAR's settlement rules go further on the buyer's side, requiring a buyer's agent's written agreement to say conspicuously that broker fees and commissions are not set by law and are fully negotiable. A broker who calls a rate "standard" is quoting you that broker's own price, and you can counter it.
Ways to structure the fee
The structure matters as much as the number, because each one pays the broker for a different result. A listing can combine them.
| Structure | How it works | What to settle in writing |
|---|---|---|
| Percentage of the price | The fee rises and falls with the sale price. | Which price it is figured on, the contract price or the price after any credits to the buyer. |
| Flat fee | A fixed amount, whatever the price. | What it covers, and whether any part is owed if the sale does not close. |
| Tiers | One rate up to a set price and a different rate above it. | The break points, and whether each rate applies to the whole price or only to its own slice. |
| Lower fee if the listing side finds the buyer | A smaller total when no separate buyer's broker has to be paid. | The dual agency terms, since California allows it only with the knowledge and consent of both you and the buyer. |
| Reduced fee for excluded buyers | A smaller fee, or none, on a sale to a buyer you named in advance. | The names, written into the agreement. |
Tiers are the structure worth modeling before you sign. Write out what the broker would earn at the price you expect, at one above it and at one below, and see whether the arithmetic pays the broker more for the part of the price that takes the most work to get.
How the fee is shared with a buyer's broker
When the buyer has a broker of its own, that broker gets paid too, and the question is by whom. Your listing agreement can let your broker offer part of its fee to a broker who brings the buyer. Since August 17, 2024, NAR's settlement rules have kept those offers off the MLS, but with your approval a broker can still communicate one through flyers, emails and similar channels, according to NAR's guidance.
The buyer's side changed at the same time. Under NAR's rules, an MLS participant working with a buyer must have a written agreement with that buyer before touring a home. It has to state the agent's compensation in a form that is objectively ascertainable, such as a flat amount or a percentage, and it bars the agent from taking more than that from any source.
California followed with a rule of its own. Since January 1, 2025, Civil Code section 1670.50, added by AB 2992, has required a buyer's agent to sign a written representation agreement with the buyer no later than the buyer's offer. The Department of Real Estate says the agreement must state the compensation, the services, when the fee is due and an end date no more than three months after signing. That three-month limit does not apply when the buyer is a corporation, a limited liability company or a partnership.
For you, all of this turns into a negotiation inside the purchase contract. A buyer may ask in its offer that you pay some or all of its broker's fee. You can accept, counter or refuse that request like any other term, and whatever you agree belongs in the contract and in your estimate of what you will net. However the fee is split, Business and Professions Code section 10137 has compensation shared between licensees paid through each one's responsible broker.
When the fee is earned
The commission clause fixes the moment the fee is earned, and you only feel the difference when a deal goes wrong.
- A fee earned at the close of escrow depends on the sale finishing. If the buyer walks away, look to the agreement for what, if anything, you owe, including any share of a deposit you keep.
- A fee earned when the broker produces a buyer ready, willing and able to buy on your terms can be owed on a sale that never closes. The DRE's reference book describes an exclusive right to sell as entitling the agent to its compensation if the property sells during the listing, whoever makes the sale, or if the agent presents an enforceable offer from a ready, able and willing buyer on terms the listing authorized or you accepted.
Under that second wording, turning down a full-price offer on your listed terms can still leave you owing the fee, which is one more reason the list price deserves care. The same reference book notes that a broker sometimes also has to show it was the procuring cause of the sale. If you can get it, a fee earned only when escrow closes, and paid only from the proceeds, ties the commission to money you receive.
The fee can reach further in two directions. A withdrawal-from-sale clause can make it payable with nothing sold, which matters if you might cancel the listing partway through. And a protection period can carry it past the listing's end for buyers the broker introduced.
What the commission clause should say
Every term above has to be in the signed agreement to count. Civil Code section 1624 makes a promise to pay a broker for selling real estate invalid unless it is in writing and signed, so a rate agreed on the phone binds nobody until it is on the page. Before you sign, check that the clause covers:
- the amount or formula, and the price it is figured on;
- the trigger, in one sentence you could read aloud and explain;
- what you owe if the buyer defaults or the sale fails, and whether the broker shares a deposit you keep;
- whether your broker will offer part of its fee to a buyer's broker, how much, and how that offer will be communicated;
- any lower fee if the listing brokerage brings the buyer, with the dual agency terms that go with it;
- exclusions, the protection period and any withdrawal clause, each read against the fee.
Shaya can tell you which of these terms are worth pushing on and how one broker's proposal compares with another's. He is not an attorney, so have a real estate attorney read the finished clause before your signature goes under it.