$1.8B verdict may change how homes are bought, sold in Utah
Nov 2, 2023, 5:00 PM | Updated: 5:00 pm
(FILE: AP Photo/Matt Rourke)
SALT LAKE CITY — A major verdict could disrupt how Americans buy and sell homes and pay commissions to real-estate agents during real-estate transactions. Also, a Utah real-estate expert gives his interpretation of the lawsuit.
The sellers of more than 260,000 homes in Missouri, Kansas, and Illinois were given a $1.78 billion award when a jury found the National Association of Realtors and real estate franchises HomeServices of America and Keller Williams guilty of colluding to inflate real estate commissions, Axios reported
Are you wondering who pays the real estate agents when buying or selling a home? Standard practice is the seller pays the real estate commission of both the listing agent and the buyer’s agent, according to Ruth Johnson, a real estate agent in Austin, Texas, tells Realtor.com.
Ask the real estate expert
Will this verdict affect real-estate transactions in Utah, and if so, how?
To sell a house in Utah worth $510,173 — the average cost for a home —you’ll pay about $27,345 in Realtor fees or 5.36%. This is the average real estate commission in Utah, according to a survey by Clever.com.
Dave and Debbie continue the discussion with Rob Ockey, who is the chief operating officer of Presidio Real Estate.
Fees are not set in stone
Ockey said there is a long-standing misconception underlying the discussion about commissions during real-estate transactions.
“There’s a lot of misconceptions that have been brought forth of what this lawsuit was about. Unfortunately, this idea that . . . sellers had to pay — that’s just untrue.
“The misconception is that real estate agents have one fee. They only charge one fee, and the seller is obligated to pay that one fee. First of all, commissions not only are but have always been negotiable,” Ockey said.
The seller has always been able to decline to pay the buyer’s agent, he said, but “I think it’s just been communicated in a way that consumers believe that it’s only one way possible” to purchase real estate.
Costs and fees a burden for first-time buyers
He added that sellers have, for many years, paid both agents’ fees to make the home more attractive to buyers. This is because of the steep upfront fees and costs, such as the down payment for their loan. This can be burdensome for home buyers, especially for first-time buyers.
Ockey said commission shopping already exists in which the buyer or seller weighs the service value the agent provides against the fee and decides whether to proceed or to move on to a better deal with another buyer or seller, as the case may be.
But Johnson points out that “while sellers pay the fees, they usually include them in the price of the home.” In that sense, you could say the buyer pays the fees after a home sells, according to Realtor.com.
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