Who Pays the Agents Now?

Mount Airy Real Estate by Maureen Nichols, REALTOR®
Team Bonnie and Maureen of RE/MAX Realty Plus

Other than our wonderful volunteers, does anyone “work” for free?

Career paths differ, as does how workers get paid, be it by hourly wage, annual salary, by the job or by commission – a percent of a sale. The majority of Real Estate Agents (we are REALTORS® only if we are a member of the National Association of REALTORS®, the state association and a local association – what is known as a three-way agreement) are independent contractors and get paid by commission.

When there are two parties to a sale – a buyer and a seller – who pays the commission? In Maryland, the seller sets the sales price and negotiates the commission rate via a contract with their “listing” agent. Our standardized listing contracts – since the beginning of Buyer Agency in 1991 – have been provided by the legal division of Maryland REALTORS® and have broken out how the negotiated commission is going to be paid out. As a seller in our neck of the woods, you fill in ALL the blanks – the total commission and then how much of that total is going to your listing agent, how much is going to the buyer’s agent and, if applicable, how much goes to a sub-agent.

Did this change on August 14, 2024? Not really. Our standardized contract changed a little bit – basically making bold print out of check boxes and fill-in-the-blanks to make sure sellers absolutely, positively know that commission is negotiable.

Did Buyer Agency rules change on August 14, 2024? Not really. We have ALWAYS!!!! been required to have a signed Buyer Agency Contract with a buyer in order to legally represent them. Without one – we might be with the buyer, but we’re working for a seller we’ve never met and that is a fact. With one, that buyer understands that if we are not getting paid by the seller, it is the buyer’s responsibility to pay us. The revised standardized contract now shows this in bold print, with a fill-in-the-blank amount, making sure buyers absolutely, positively know that we get paid to work for them and how much we get paid.

Well, but, here’s the next question: Who pays the commission now? Things “changed” on August 14th to comply with a settlement agreement the National Association of REALTORS® negotiated. This agreement did not include rules concerning who pays what or how much who pays, it concerns only how compensation (commission) is disclosed and how it is advertised. Does this change things? Not really.

Going forward, buyers and sellers will hopefully have a clearer understanding of who is paying what to who and their own monetary obligations – if any – to their agent. But this agent doesn’t see any huge upsets in our industry or any substantial changes to the commission structure – because it works and it works well. It allows for all parties to have representation and for all workers to get paid from the proceeds of the sale; the sale price the buyer is paying… So now I’ll ask: Who “really” pays the commission?

For more information, especially to understand the value REALTORS® bring to the table for both buyers and sellers, check out: marylandhomeownership.com

• Increased buyer interest: When sellers cover the commission, the property becomes more attractive to a broader range of buyers.
• Potential for higher selling price: Bigger pool of buyers, higher sale price
• Faster sale of property: Remove the extra financial burden on buyers, quicker sale, less time on market.
• Enhanced seller reputation: Sellers who cover commission costs are often viewed as more motivated and cooperative
• Simplified negotiation process: With commission costs off the table, negotiations can focus squarely on the property’s price