L
ocal real estate agents are preparing for changes in the buying process due to a nationwide settlement of a class action lawsuit filed in Missouri in 2019. The lawsuit was followed by similar lawsuits across the country. A jury in the Kansas City, Missouri lawsuit found that buyer’s agent commissions were being set and paid in a way that violated antitrust laws. The defendants, including the National Association of Realtors and several large national real estate companies, were ordered to pay $1.8 million in damages.
In May, the National Association of Realtors settled the series of lawsuits by agreeing to make changes in business practices and pay $418 million in damages without admitting guilt. Some reports have described the changes as sweeping and complex, while others have downplayed their impact, claiming only procedural changes.
In the past, listing real estate agents could offer to pay the buyer’s agent through the Multiple Listing Service (MLS), a database used by real estate agents to advertise and exchange property information. Under the agreement, MLS will no longer be used in negotiations for buyer’s agent payments. Instead, these negotiations will be between the buyer and their buyer’s agent, potentially involving the seller’s agent but not using MLS. The seller’s agent may still offer to pay the buyer’s agent as part of the sale negotiations and may authorize their broker to compensate the buyer’s agent.
According to Chris Sloan, broker/owner of Group 1 Real Estate in Tooele, the negotiation process will be more personal and offer more options than the traditional method. While real estate agents will need to be prepared for this change, it may not seem like a big change to potential buyers. The other significant change is that buyer’s agents must sign an agreement with potential buyers before showing property to them. This is not a new requirement; real estate agents in Utah have used written agreements with buyers for 20 years. However, these agreements will now be initiated up front, before a buyer views a home.
The written agreement must include an objective amount of the payment to the buyer’s agent, such as a specific amount of commission, flat rate, or hourly compensation. The buyer and buyer’s agent will discuss the services the agent will provide and agree on the cost of those services. They may agree that the buyer will pay their agent directly, ask the seller to help pay the buyer’s agent, or choose a home where the seller’s broker offers to offset the cost.
While there may be more complexities and additional negotiations and paperwork, Sloan believes that these changes will not affect the price of a home or cause a dramatic change in commissions. Instead, he hopes the changes will bring more discussion between all parties and the consideration of additional options.
