$418M settlement may drop costs for home sellers in Utah, U.S.
Mar 15, 2024, 6:30 PM
SALT LAKE CITY — A $418 million settlement announced Friday will shake up the real estate market in Utah and across the country. It will likely drop the cost of selling a home.
The sellers of more than 260,000 homes in Missouri, Kansas and Illinois were given a $1.78 billion award late last year. This came after a jury found the National Association of Realtors (NAR) and real estate franchises HomeServices of America and Keller Williams guilty of colluding to inflate real estate commissions, according to Axios.
The NAR has required listing brokers to provide an upfront offer of compensation to a buyer’s agent. This usually comes out to about a 6% split between a seller’s broker and a buyer’s agent. A listing broker or listing agent is a real estate professional who assists a homeowner in listing and marketing a home for sale.
Sellers look to be winners
If the settlement is approved by a federal court, the standard 6% commission goes away. Sellers would no longer have to make a compensation proposal to prospective buyers and their agents, according to NBC News.
Kreg Wagner, legal council with the Utah Association of Realtors, tells KSL NewsRadio about the implications of the settlement.
Wagner said the real-estate agreement on commissions and compensation in Utah has been clear.
“In the listing agreement … the seller has agreed to pay the listing broker,” he said. “Then, the listing broker has agreed to share a portion of their compensation with the buyer’s representative.”
Commissions have always been negotiable, says real-estate expert
After the $1.78 billion award was announced last year, KSL NewsRadio spoke with Rob Ockey, who is chief operating officer of Presidio Real Estate
He 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,” Ockey said. “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.”
The seller has always been able to decline to pay the buyer’s agent, he said.
“I think it’s just been communicated in a way that consumers believe [there is] only one way possible (to purchase real estate),” Ockey said.
Wagner agreed, saying there has never been a fixed rate between agents for a buyer and a seller — in Utah at least.
“Absolutely [there is] not a fixed rate. It’s going to be determined between broker to broker as negotiated with the clients. And, frankly the offers of compensation as they are right now are completely public facing. So again, there’s an element of transparency that’s unique to Utah when you compare it to other states,” he said.
Sellers have, for many years, paid both agents’ fees to make the home more attractive to buyers 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 added.
Related:
- Video: What is housing going to look like for Utah in 2024?
- $1.8B verdict may change how homes are bought, sold in Utah
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