On Aug. 17, changes to the real estate industry took effect that will require more conversation upfront regarding agent’s commissions, or the fees paid for the services provided to homebuyers and sellers. These changes come as the result of a settlement by the National Association of Realtors (NAR) and the Department of Justice from 2023. 

The settlement, and the changes to commissions, have been as reported in the media as, “aiming to increase transparency and empower consumers.” 

Traditionally, the average real estate commission rates were between 4% to 6% of the total purchase price of the home. That commission amount was split in half between the listing broker and the buyer's broker. Those expected commissions were listed on the multiple listing service, or the MLS.

Current president of the Utah Realtors Association Adam Kirkham explained the rule changes as follows:

“The first rule is we [the agents] must have a signed agreement in place before we show a buyer a home,” Kirkham said. “The second main change is a buyer's agent commission can no longer be advertised anywhere in the country on a multiple listing service.”

No longer able to list commissions on the MLS means that going forward, the party selling the home will need to negotiate with the party buying the home on the commission to be paid to the agents upfront. Those negotiations can be communicated via text, email, social media, a sign in the yard or by some other less formal means.

Kirkham has been in the industry since 1999 and said the changes will bring greater clarity to the home buying process.

“Both sides are going to benefit and we're raising the bar of professionalism,” Kirkham said.

Utah agents have long been accustomed to the practice of having an agreement signed by both the seller’s agent and the buyer’s agent before an offer to buy a house was written, as it was part of Utah law. Kirkham said these changes are procedural for Utah agents.

Representation matters

 FOX 13 reported in March of this year that these changes could impact first-time homebuyers, as hefty price tags for homes are placed on top of closing costs and agents’ commission. Buyers and sellers may begin to question the value of having representation.

“[Per the new law] if the seller isn't offering a commission, they (agents) have to basically convince the buyer why they're of value,” said Realtypath agent Brittney Cornia. 

In the Utah real estate scene since 2016, Cornia has had to prove her value to clients, noting that there is an abundance of agents to choose from. In her career, Cornia has had to deal with problems that have come up during a transaction ranging from a house testing positive for methamphetamine (meth), testing positive for mold, and even a property flooding.

“It’s better to have an agent on your side because we have all the resources,” Cornia said. 

Cornia admitted that while the changes are still new territory for a lot of agents, they will be positive overall.

Salt Lake City resident Angela Wood has known her realtor for more than 15 years, as they worked together toward the purchase of her current home located close to the University of Utah. A recent empty nester, Wood’s home has been for sale since May. However, prior to listing her home, Wood and her realtor worked through a checklist of items needing repair, as well as when the best time to list would be.

Homeowner Angela Wood has had her SLC house listed for sale since May and would never consider not using a real estate agent even with the new nationwide rule changes that took effect Aug. 17. (Photo courtesy of Angela Wood)

“My perspective is that for complicated transactions, you hire an expert,” Wood said. “I would never consider selling my home without an expert to help me list, promote, prepare, show, navigate inspections, negotiate with buyers and close.”

Wood said that she trusts her realtor and will employ her services to buy her next home and anticipates signing representation agreements prior.

Communication is key

Lynn Buckway of The Buckway Group has been in real estate since 2007 and said beyond just being detail oriented, being able to negotiate, and having good communication skills, a successful agent listens intently to their clients and is prepared to give them the best possible experience. 

“It makes a huge difference when someone can sit down and actually listen,” Buckway said. “I feel like setting the right expectations is probably about 80% of what I do.”

When expectations are set right, Buckway said clients end up happy, and that to him, is worth it. While he finds joy in his work, Buckway said being in real estate is not a hobbyist career choice, especially with the new changes. An agent will work long hours and spend a lot of time away from loved ones. 

The detail orientation, the negotiation, the communication, and the listening have led Buckway toward being able to recognize the joy that a homebuyer, or seller, feels when the transaction is complete.

“I had a first-time homebuyer ask me if she could hug me like three times at the end [of a transaction],” Buckway said. “I feel like making money is a byproduct of just helping people and doing a good job.”

Since Aug. 17, Buckway sent representation agreements to a new set of buyers looking to work with him who had little knowledge of the rule change. They were eager to sign those agreements upfront and get started in finding their new home.