There is a lot of confusion—and misinformation—about commissions these days. That’s not surprising when many sellers receive vital information from agents who have a vested interest in keeping commissions as high as possible. Let’s separate myth from truth.

Myth 1:

Sellers should commit to paying a minimum buyer’s agent commission in the listing agreement to attract more buyers. If they don’t, agents will boycott the listing.

Probable Motive:

Listing agents know that they can’t secure a high buyer’s-side commission when a buyer finds the house on the MLS, Zillow, Redfin or from other marketing channels because they are already being paid for the listing side. To protect their double-ended payout, they “persuade” sellers to set a minimum commission upfront, so they do not have to negotiate for it once the buyer surfaces.

Truth:

Sellers should avoid pre-setting any amount of commission for the buyer’s agent in the listing agreement. Instead, all offers should be considered, including those with commission requests. The commission can then be negotiated based on the buyer’s agent’s actual contribution, encouraging broader participation, increasing competition, and lowering the average commission cost to the seller. 

A buyer may choose to work with any agent that they prefer, and the agents face no disadvantage if their client purchases a DeLeon listing versus a property listed by another brokerage. The mechanics work the same: the buyer first engages a buyer’s agent, and when submitting an offer, the buyer can request that the seller cover some or all the commission owed to their agent.  

However, buyers who are not working with any agent do have the option of submitting offers on our listings through a DeLeon buyer’s agent without either the buyer or seller paying a buyer’s-side commission. In these cases, we cover the buyer’s agent’s compensation.

Another reason not to set a minimum commission in the listing agreement is that, following the industry’s massive antitrust case loss and subsequent settlement, there are now extreme limitations on advertising any amount of commission being offered. Therefore, there is no practical benefit to pre-committing to a commission amount that can’t be effectively advertised.

Since August 17, 2024, none of our listings that we have sold included a preset minimum commission for the buyer’s agent. Nevertheless, we have still received 283 offers from non-DeLeon agents, ranking above 99.8% of all agents or teams in terms of the number of offers from outside agents. This strong statistic is due, in part, to our industry leading marketing, online videos and other collateral materials, as well as our refusal to hide listings through questionable “office exclusive” practices.

The only way an agent can keep a listing hidden from buyers who actively utilize automated alerts, popular search tools, such as Zillow and Redfin, and the MLS is by withholding the property from these platforms using the “office exclusive” technique.  

Myth 2

Buyer’s agents won’t get paid if the seller doesn’t offer commission in the listing agreement.

Truth:

Before seeing homes, buyers must sign an agreement with their agent that sets the agent’s compensation. That agreement ensures the buyer’s agent gets paid—whether or not the seller contributes. If the buyer does not have an agent, then they can submit their offer through a DeLeon buyer’s agent, and we will cover all their compensation.

Myth 3

All sellers are obligated to pay 2.5% (or some other number) to the buyer’s agent, so it doesn’t hurt the attractiveness of the offer for the buyers to ask the seller to cover it.

Truth

Our sellers are under no obligation to pay any set amount of commission to the buyer’s agent, which is also the approach recommended by the California Association of Realtors’ (“C.A.R.”) and its legal department. Reviewing all the offers we have received since August 17, 2024 settlement date:

Looking at the accepted offers, the percentage of offers with no commission request rises to 39.51% due to the enhanced attractiveness.

Myth 4

It benefits sellers to hide their home’s availability for a period of time so only buyers represented by the listing brokerage are aware of the listing. This dubious practice is often referred to as an “Office Exclusive,” “Private Exclusive” or “Pocket Listing.”

Truth:

This practice primarily benefits the listing brokerage, not the seller. By limiting exposure, the brokerage decreases marketing costs while increasing its chances of collecting both sides of the commission but reduces competition and market reach—generally to the seller’s detriment. 

Brokerages often use well-rehearsed scripts to make the practice sound innocuous—but ask yourself, why would you ever trust an agent who proposes restricting your home’s exposure just so their brokerage can double-dip on the commission?

It is DeLeon Realty’s long-standing policy to never take commission from both sides of any transaction. Regrettably, no other major local brokerage has adopted a similar policy. Double-dipping creates serious conflicts of interest and encourages questionable practices like “office exclusives.”

The Takeaway

Since the August 17, 2024 settlement, DeLeon sellers have paid an average buyer’s agent commission of just 1.31%—lower, we believe, than any other major brokerage in the area. Remember: real estate commissions are negotiable. Period. 

If buyers truly realize that commissions are negotiable, it is a statistical abnormality that 55% of the offers we have received requested exactly 2.5%. However, this is still a material improvement over a study we did before the settlement, which found that 95% of the sellers of homes between $2 and $9 million in Palo Alto offered exactly 2.5%.  

Despite having what we believe is the lowest average commission, we remain confident that we provide the most extensive marketing, the highest level of service, and full coverage of staging, property inspections, and pest inspections—all included at no additional cost.