Who Pays Realtor Fees in Maryland?

Real estate commissions represent a significant financial aspect of property transactions for both buyers and sellers. Understanding the structure and allocation of these fees is important for anyone engaging in the real estate market. In Maryland, clarity regarding these costs is beneficial for planning and budgeting during a property sale or purchase.

Defining Real Estate Commissions

Real estate commissions are fees paid to licensed real estate professionals for their services in facilitating a property sale. These services typically encompass marketing a property, conducting negotiations, and managing extensive paperwork. Commissions are generally calculated as a percentage of the property’s final sale price. In Maryland, average total real estate commission rates have been observed around 5.13% to 5.46% of the home’s sale price. This percentage is divided between the agents representing the buyer and the seller.

For instance, an average total commission of 5.13% might involve approximately 2.74% for the listing agent and 2.39% for the buyer’s agent. These rates compensate the agents and their respective brokerages for their efforts.

Seller’s Role in Commission Payment

In Maryland, the seller traditionally holds the direct contractual responsibility for paying the entire real estate commission. This agreement is established and documented within the listing agreement signed between the seller and their listing broker. The total commission agreed upon in this document typically covers the compensation for both the seller’s agent and the buyer’s agent, often through a commission split.

This commission amount is generally not paid upfront by the seller but is instead deducted from the sale proceeds at the time of closing. For example, on a $330,000 home, the total realtor fees could be around $16,929, which is subtracted from the seller’s funds. While the seller is contractually obligated to pay their own agent, it has been common practice for sellers to offer to cover the buyer’s agent fees as well.

Buyer’s Agent Compensation Structures

The compensation structure for a buyer’s agent often leads to misconceptions, particularly regarding direct payment from the buyer. Historically, and still commonly, the buyer’s agent receives their compensation as a portion of the total commission paid by the seller to the listing broker. This arrangement is known as a commission split, where the listing broker shares a pre-agreed percentage of the overall commission with the buyer’s broker.

While the buyer typically does not hand money directly to their agent for commission at closing, the compensation is implicitly factored into the overall sale price of the home. Recent industry changes, particularly from the 2024 NAR settlement, have introduced new dynamics, requiring buyers to sign an agency agreement with their agent outlining compensation. This agreement specifies the services provided and how the agent will be paid, with the possibility of the buyer directly paying their agent, though sellers may still offer concessions to cover these fees.

Factors Affecting Commission Agreements

Real estate commission rates in Maryland are not fixed by law and are subject to negotiation between the seller and their listing broker. While there are average rates, such as 5.13% to 5.46% of the sale price, the final percentage is determined by the specific terms agreed upon in the listing agreement. This flexibility allows for adjustments based on various factors, including market conditions or the level of service provided.

The specific terms outlined in the listing agreement or purchase contract can influence the ultimate commission payment. For instance, a seller might offer a competitive buyer’s agent commission to make their home more attractive to potential buyers. Different transaction types, such as a For Sale By Owner with agent involvement, may also alter the standard payment dynamics.