Understanding real estate commissions in Bethesda, Chevy Chase, and the Washington DC area has never been more important. Here’s what every home seller needs to know.
A Common Concern from Bethesda Home Sellers
Most homeowners don’t fully understand how real estate agent commissions work—and honestly, it’s no surprise. The system changed from when they most likely bought their last home. During those times it was assumed that the seller would pay the buyer agent commission and they would not have to.
So let’s unpack why the changes happened and how it works now for those planning on selling their Bethesda, DC or Montgomery County homes.
Prior to August 2024, in most real estate transactions throughout the Washington DC metro area, including Bethesda and Montgomery County, it was the listing agent and the home seller who would decide how much the buyer agent would be paid if the buyer agent got the buyer to closing. This was called an “offer of compensation” and it was also displayed in the multiple listing system. In the old way, the buyer agent knew exactly how much the seller was going to pay them. Regardless of what that amount was, per the Realtor Code of Ethics, the buyer agent could not ask for more.
Starting in August 2024, the U.S. Justice Department outlawed this way of doing business. Their position was that the listing agent and the seller should NOT be the ones deciding what a buyer should be willing to pay their buyer agent for their services. The Justice Department wanted the buyer and the buyer agent to have their own, negotiated, agreement on what the compensation should be.
In addition, the amount that a seller would be willing to pay a buyer agent could no longer be displayed in the multiple listing service.
Under the current rules, when I first meet with a seller, we discuss what the listing compensation is for the listing services that I provide. I let them know what those services include and when and how they get paid.
What we no longer do is determine what the buyer agent’s compensation will be. However, we still need a plan for the two different ways the buyer will make an offer and what additional compensation may be attached to that offer.
The two different ways an offer may arrive are :
An offer from a buyer who has hired a buyer agent to represent their interest. (most common)
or
An offer from a buyer that has not hired a buyer agent to represent their interest. (least common)
Each way can have a different financial implication to you as the seller.
This scenario represents about 90% of transactions in the Bethesda and DC area.
Before diving deeper, it’s important to first understand what has already happened on the buyer’s side of the transaction prior to the buyer making the offer.
By law, prior to the buyer agent showing the buyer any properties, they must first have written agreement on what the buyer agency compensation will be.
In that agreement, the buyer and buyer agent also have an understanding that the buyer can ask the seller to pay the buyer agent’s fee. If the seller agrees to pay the fee in full, then the buyer has no out of pocket expense for the buyer agent fee as the seller will pay it on their behalf.
However, if the seller does not agree to pay the fee in full, then the buyer is on the hook to pay that shortage to the buyer agent. This creates an economic and cash concern for the buyer. Now they would need to have the extra cash on hand to pay their agent fee and it increases the total cost of the purchase.
Prior to making an offer, buyers now want to know what the seller is willing to pay the buyer agent. However, since this information is no longer publicly available in the multiple listing system, the buyer agent needs to ask the listing agent what the seller is willing to offer. In order for the listing agent to disclose the answer, the seller must first give the listing agent permission. This is done via the listing agreement.
When a seller signs a listing agreement, there is a place for them to indicate how much they are willing to compensate a buyer for the buyer’s agent’s fee. This amount is not an obligation, but it is a genuine intention of what the seller is willing to do as part of an acceptable contract.
When the seller gives the listing agent advance permission to do this, it clears up the buyer’s confusion on how much they will need to pay out of pocket to their buyer agent.
What happens next, is that the buyer will submit an offer that includes the term of “how much the seller will pay the buyer agent”. Once the seller accepts the contract, this and all other terms are binding.
In my experience, especially when I’m representing the buyer, when the seller is not clear about this up front, it leads to uncomfortable back and forth negotiations and things can start heading in the wrong direction very quickly. I’ve even had a few buyers just walk away from the deal.
Here’s the point, what matters most to sellers is the bottom line. The price, commission, settlement date and all other terms are negotiable. While it’s easy to focus on just one term, buyer agent commission, it’s more important to focus on the entire deal structure to make sure the seller is ending up net positive.
My observation is that sellers, having once been buyers, understand that the buyer is looking at the total package of costs when making their offer decision. For the same reasons that many sellers choose to spend dollars on painting, fix up repairs, and staging to improve their net proceeds. Offering to pay the buyer agent commission is also a very helpful way to entice a buyer.
Approximately 10% of buyers in today’s Bethesda and Washington DC market choose not to hire an agent.
Four reasons this may happen are:
Regardless of the reason why, the listing agreements have a line item for “additional compensation to the listing agent for an unrepresented buyer”. This line item stipulates how much the extra compensation will be paid to the listing agent for doing much of the work normally be done by a buyer agent.
Keep in mind that the listing agent does not represent the buyer. However, they will need to spend quite a bit of time doing all the administrative tasks required to put an offer together and navigate it through to settlement.
Recent court settlements have created shifts in commission practices, making it more important than ever to have a clear understanding of how things work before listing your home.
Buyers and their agents may approach transactions differently now—especially in competitive markets like Bethesda, Chevy Chase, and upper Northwest DC. This is where experienced local guidance becomes invaluable. My role is to walk you through all scenarios so you feel informed and confident in your decisions.
Ron and his team were fantastic, and helped us sell our house quickly and at a price above asking. After being in our house for 27 years, we were nervous about the work involved in getting it ready to sell. Starting from scratch, Ron and his team helped us get the house to market in three weeks, and it sold within five days with multiple offers. Ron was friendly, knowledgeable, patient, and always available – no matter what time of day or night. I can’t say enough good things about him – great experience all around!!
Thinking about selling your home in Bethesda, Washington DC or Montgomery County Home? I’m Ron Sitrin with Long & Foster Real Estate, and I’ve been helping clients navigate the real estate process for over 30 years. If you would like to learn more, a good next step is a quick phone call or to set up a Seller Orientation appointment
The seller orientation will cover:
Role of the Agent
Road Map to Selling
Understanding current market statistics
Fix up suggestions to increase your net proceeds
Pricing your home
Review of the offer contract terms
What to expect when an offer comes in
Calculating your net proceeds from the sale
A review of all documents that a seller needs to sign
Whether you’re curious about current market conditions or ready to develop a home selling strategy, I’m here to provide the clarity and guidance you need—no pressure, just professional expertise.
See more Reviews: The Ron Sitrin Team’s Google Reviews
Ron Sitrin is a top-rated Bethesda realtor with Long & Foster Real Estate, specializing in residential sales throughout Montgomery County, Bethesda, Chevy Chase, Potomac, and Washington DC. With over three decades of experience, Ron can help you navigate today’s evolving real estate market with confidence and clarity.
Contact Ron Sitrin, Long and Foster Real Estate:
Cell 202-321-4677 Office 202-966-1400
